Furlough: HMRC clarifies TUPE rules and warns against fraud

Employees who were transferred to another organisation under TUPE after 28 February 2020 can receive 80% of their wages while furloughed under the Coronavirus Job Retention Scheme, it has been signalled.

The government’s furlough claims portal will be launched on 20 April, HM Revenue & Customs has also revealed.

According to an email from the Treasury to David Johnston, MP for Wantage in Oxfordshire, which addressed the issue of TUPE, the new employer can submit a claim for 80% of wages for furloughed employees even if they were not on that organisation’s payroll on the 28 February cut-off date because they have since been TUPE’d. The email says that the staff are “eligible for the CJRS”.

Prior to this, there had been confusion around how TUPE affected employees’ eligibility under the scheme.

Barrister Daniel Barnett from Outer Temple Chambers highlighted the issue on his Employment Law Matters podcast. He said: “Who pays? Not the transferer because the transferer won’t have paid them any salary [beyond 28 February].

“Under the scheme as it stands, the new employer can’t claim either as the employees wouldn’t have been on their payroll as of the 28 Feb.

“It’s a loophole; something the government hadn’t considered originally and it’s an odd result.”

Barnett said the Treasury was expected to publish a further update to its Coronavirus Job Retention Scheme guidance to clarify the matter. The Treasury has been approached for comment.

Meanwhile, the government is likely to launch its furlough claims portal on 20 April, with the first wage payments made to employers likely to be made on 30 April. A guidance document is expected to be published by HMRC in the next week.

HMRC has said any fraudulent claims made under the scheme – for example, where employees have continued to work while furloughed – are likely to result in criminal convictions. Its chief executive Jim Harra, told the Treasury select committee yesterday (8 April) that he expected it to be targeted by fraudsters.

“We are going to be paying out a vast sum of money in a rapid period of time. Any scheme like this is a target for organised crime. Any scheme that pays out I’m afraid attracts criminals that want to defraud it and people that are genuinely entitled to it who inflate their claims,” he said.

He said HMRC had put in place a number of measures to minimise fraud, which included:

• the requirement for an employer to have already been authenticated by HMRC
• a four- to six-day payment processing period to allow background checks
• checks on employers after a payout has been made to verify a claim was real.

Harra reiterated that employees who had been furloughed must not carry out any work for their organisation, and urged those who had been asked to continue working while on furlough to report their employer.

He said: “We are aware that some employees have already been reporting that some employers have asked them to work during the furlough period. We expect the vast majority of employers to do the right thing and in fact in many cases they have no choice because people are genuinely furloughed and cannot work.

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“But we will be asking anyone who’s got information about the scheme being abused to let us know and there is an online hotline service for any employee who feels they are being asked to be complicit in something they don’t want to be complicit in.”

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