Furlough: HMRC clarifies TUPE rules and warns against fraud

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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.

“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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23 Responses to Furlough: HMRC clarifies TUPE rules and warns against fraud

  1. Avatar
    Lyn Inkpen 9 Apr 2020 at 11:17 pm #

    What about people who started a new job on after 28th Feb? They will have received payment for work done in March but can not be furloughed

  2. Avatar
    Nigel a farrant 10 Apr 2020 at 4:40 am #

    I have just been tupe,I have to sign paper work to reduce my hours from 39hrs a week down to 36hrs.i have to sign before 12.4.20.that is day I think I will be furloughed.do I get pay for 39hrs or 36 hrs.on the 80%

  3. Avatar
    Ali X Preston 10 Apr 2020 at 11:49 am #

    So HMRC are allowing TUPE employees who were added after 28th February. What about new starters? Surely the mechanisms in place would work for them (I admit there would be an admin pressure, but no more than for TUPE) particularly as punishing the tax payer for any fraud that only a company is able to commit is immoral and unjustifiable (even under the current emergency measures – Imagine if they purposely didn’t answer 5% of 999 calls because they assume they’re hoax calls!)

    I find all of the Treasury and HMRC’s excuses are as paper thin as the chancellor’s promise that ‘nobody will be left behind’

  4. Avatar
    Irena 10 Apr 2020 at 11:50 am #

    I meet all criterias to be furloughed. I had a phone call and text message from my GP telling me that I am in a higher risk due to my health condition and was strongly advised to be isolated for 12 weeks. I applied to my employer if they could put me in the furlough scheme. But they requested a letter from NHS which I didn’t receive. I contacted my GP and explained that. GP said that she did not understand why I didn’t receive that letter but it doesn’t matter because I anyway belong to the group of more vulnerable people in higher risk of COVID-19. It seems that having or not having that letter doesn’t make any difference. But without it my employer will only pay me SSP and how to live on £94? What can I do in this case?

  5. Avatar
    Billbo 10 Apr 2020 at 1:58 pm #

    What about employers who are not claiming for the correct amount of money??
    I work a backshift but am getting furlough on a day shift wage which is almost £4 less an hour??

  6. Avatar
    Raman 10 Apr 2020 at 4:49 pm #

    How do I know if my employer got money from Gov, and not paying to me?????

    Please assist me someone!!!!

  7. Avatar
    Linda Newman 10 Apr 2020 at 5:10 pm #

    We (2) of us work as PAs for a young lady with Learning Disabilities under the Direct Payment system. Our Employer has decided that to minimise the risk to herself only one of us will be working for the duration of the lockdown period. We have been informed by our payroll company that the member of staff not working is not entitled to be Furloughed.Is this correct and if so why as we are trying to protect our client. If possible could you please reply via my email address. Thank you

  8. Avatar
    Paul Loughnane 10 Apr 2020 at 6:57 pm #

    What about people that changed employment leaving 28.2.20 and starting new job 2.3.20

  9. Avatar
    Alison taylor 10 Apr 2020 at 7:32 pm #

    If I have been off work on sickness but returned on day of closure am I still entitled to be furloughed. My work place took me off payroll whilst I was off sick and now say I wont get any payments like my other work collegues .
    Regards Alison

  10. Avatar
    Patricia Foy 10 Apr 2020 at 8:31 pm #

    I’m still not sure if I can get any payments??
    I wasn’t on the payroll on 28th Feb… I officially started at my new job on 1sr March.
    I was made redundant from my last job on 31st January, the salon went into liquidation and closed.
    Any ideas would be welcome?
    ☺️

  11. Avatar
    Dan 11 Apr 2020 at 8:39 am #

    How would this work for someone who has left their employer on 26th Feb for a new company and started after the cut off date, but the old employer went insolvent?

  12. Avatar
    peter oldham 11 Apr 2020 at 12:11 pm #

    what about umberela companys

  13. Avatar
    Marie Robbins 12 Apr 2020 at 9:14 pm #

    How can a butchers shop double its takings and also get a 10,000 grant its unreal when certain people who have been self employed for one year get nothing

  14. Avatar
    Kim 14 Apr 2020 at 5:19 pm #

    Does anyone know who to contact regarding fraud under the furlough scheme?

  15. Avatar
    Aj john 14 Apr 2020 at 8:09 pm #

    Where to report fraudulent actions by employers, who intend to misuse the scheme?

  16. Avatar
    Odd 15 Apr 2020 at 6:31 pm #

    Who do you report to if you know of people continuing to work after being furloughed? I know of a decent size complaint doing this and it’s disgusting

  17. Avatar
    Michael Parkinson 19 Apr 2020 at 8:07 pm #

    Amazing that there is no answer on how to report fraud / misuse of the scheme, particularly seeing as though there are large companies in the wrong

    I am working for a FTSE 250 British electronic components distributor who are using the furlough scheme even though a few days before the scheme was announced, the company internally reported that they were in a strong financial position and though had seen sales drop in some areas, they had also seen sales increase in others due to stockpiling.

    The company even attempted to bring new recruits in the following week, transferring them immediately onto furlough, and have continued to recruit further i.e. expand despite having 700 workers furloughed.

    The company has even started fresh commercial agreements, sending work offshore (to Eastern Europe) whilst furloughing UK employees.

    This is at best unethical (to claim they need to save operational cash by taking from the tax payer) whilst continuing to spend and invest operational cash elsewhere.

  18. Avatar
    christopher 20 Apr 2020 at 2:52 pm #

    I have been furloughed. My company has decided to pay the additional 20% of my salary so that i receive 100%.
    My manager has told me that i will still be expected to contact customers from home. Those that refuse are being sacked.
    I get daily texts from my manager asking me to ring customers and chase payments. They give me a list of customers to contact.
    There is supposed to be a hotline setup for reporting furlough fraud but i cannot find it.

  19. Avatar
    M Tippins 4 May 2020 at 2:01 pm #

    the service charge paid by tenants in an apartment block is to cover work done by; a cleaner, a manager and a handyman/gardener. The have all been furloughed by the owners of the business,yet tenants are still being charged the monthly service charge. Is this legal

  20. Avatar
    Amirah Eddiba 12 May 2020 at 2:27 pm #

    Unknown to me since my job ended 20 March 2020, my employer furloughed us from 06/04/2020. Had 1 week payment on furlough on 01/05/2020. No back pay nothing. Now universal credit have taken money off me because she gave untrue dates she began furlough. Can’t get help from no one. HMRC a complete waste of time as furlough claim is not in my name. UC can’t seem to help me either. But quick enough to take money off me that I haven’t had. I’m sure my employer has kept any back payments and has made a fraud claim. Can’t even get in touch with her as she’s in China. What do I do ?

  21. Avatar
    Sue sone 13 May 2020 at 1:41 pm #

    I come under Tupe I am working still under my previous contract new owners took over in 28th feb March they wrote to me and said I’m on furlough scheme April I received 80 per cent salary on 12tg may I got an email saying because they are a new business they do not qualify to furlough I rang hmrc on their system it looks like I have changed jobs which I haven’t business changed hands 28tg feb I was paid 31st match I just feel completely at a kiss as to where I go from here

  22. Avatar
    S.diaz 25 Jul 2020 at 12:33 pm #

    I had gone for holidays at the end of feb and my name was not included in the furlough scheme. Can i still claim it now???

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