The Treasury Select Committee met yesterday (8 April 2020) to take evidence from HMRC on the economic impact of coronavirus. HMRC made the following interesting responses on the subject of the Job Retention Scheme (JRS):
- The JRS system is due to open on 20 April 2020.
- This should allow employers with payroll obligations at the end of the month to be able to access payments by 30 April 2020.
- Payments to employers should follow 4 to 6 working days after a claim has been submitted.
- The JRS is backdated to 1 March 2020 – HMRC expect that employers, when they first go online to make a claim, will want to make a backdated claim to sometime in March, from when they first “furloughed” employees.
- Employers don’t have to wait until they have paid the employees in order to make a claim under the JRS, they can put in a claim 14 days in advance of their payroll. If an employer needs to be put in funds in order to pay the wages, they can put in a claim first.
- The system will be open 24/7 and there will be a queuing system.
New operational guidance imminent
Practical operational guidance will be published very soon setting out how employers can get ready to access the system and ensure they have the right authentication credentials. This will include instructions on how they can compile their claims in advance of the system going live.
Will the system work?
- The system is currently being live-tested with a small number of employers.
- The system is designed to handle applications from two million PAYE schemes.
- HMRC expect most employers to put in their applications in the first couple of days and the system is designed to handle this. It will be tested for up to 450,000 claims per hour.
- HMRC hope that most employers will be able to put in applications without assistance from HMRC. If large volumes of people need to contract HMRC, the helpline may be overwhelmed. Many people have been redeployed to work on the helpline and a webchat service. There should be 5,500 people working on it when the system goes live.
Abuse risk management
HMRC outlined the lines of defence they have to protect the system against abuse:
- Employees are only eligible for the scheme if they were on payroll on 28 February 2020. This allows HMRC to check applications using existing payroll systems and employee details.
- In order to access the online service and submit a claim, employers have to be authenticated as an employer – i.e. they must already have a PAYE scheme with HMRC.
- In the 4-6 working days before payment is made, HMRC can carry out background checks to risk assess claims – they will take out any they think are high risk before payment is made.
- If anyone thinks that the JRS is being abused, (for example, employees who are asked to work by their employer during furlough leave) they can report this abuse via an online hotline.
- HMRC can retrospectively audit applications made under the JRS. HMRC confirmed that it has the ability to enforce criminal penalties in cases where businesses ‘knowingly try to defraud’ the JRS. HMRC has not yet confirmed how it is going to check that claims have been made accurately.
Rotation of employees in and out of furlough
The JRS does allow employers to rotate their furloughed staff, provided that individual workers were furloughed for the minimum three-week period. HMRC gave the example of a workforce of 100 employees, with enough work for 50. The employer in these circumstance could furlough 50 employees for 3 weeks, then the other 50 for 3 weeks.
Cut-off of 28 February 2020
HMRC confirmed that employees who started work after 28 February 2020 will not be eligible under the JRS.
Furloughed workers can work for other employers
HMRC confirmed that there is an appreciation that labour supply should not be restricted and furloughed workers should be encouraged to take on other jobs whilst furloughed. They should also be encouraged not to stagnate and should be given training where possible (receiving the National Minimum Wage while training), but they must not otherwise work for the employer that furloughed them. They may also volunteer.