All that glitters is not gold.
Many employers may have breathed a sigh of relief (no doubt hidden by their mask) at the news that the government would provide funding of up to 80% salaries of those staff that are furloughed. The ability to keep staff on the payroll, but not bankrupt the company must have been a major boost to struggling companies.
However, whilst many companies see this as an invaluable lifeline, I have no doubt that a few see it as a way to make a profit. The reason I’m sure of this is not because I’m a cynic (although I am) but because I’ve seen it for myself.
I am aware, for example, of a company that asked staff to take furlough, and then continue to work from home. How do I know this? The foolish company in question put it in writing, in an email to their staff.
Even if they hadn’t, it would no doubt have been obvious from their tax and VAT returns. How are you going to justify your turnover for this period if you had no staff? I know I work hard, but even I can’t do 30 hours of billable time a day, on my own. So if your staff don’t shop you, your own accounting records probably will. What’s more, unless you do your own accounts, it’s likely that your external accountant will notice, and are they likely to cover for you?
It may be that these companies believe that the government will be so busy sorting out the mess to come, that they won’t have time to investigate, and everyone will get paid out. However, it’s not the government doing the work, it’s HMRC who have access to both your filed accounts and your furlough applications. What’s more, the penalties are bound to be severe. This would amount to fraud, so it wouldn’t just be a question of paying back the money, but it is also likely to lead to criminal proceedings. I can imagine that your average court is going to take a very firm line with anyone that it believes was deliberately milking the system at a time like this.
Nevertheless, I’m sure there are people out there who will genuinely misunderstand or misinterpret the scheme. We’re not offering help to anyone who is looking to illegally exploit government support, but we are offering support to anyone and everyone that needs to furlough their staff and wants to make sure that they get it right.
Kleyman & Co Solicitors. The full service law firm. Worth our weight in words.