This week's announcement by the Chancellor heralds a major overhaul of the previously announced Job Support Scheme.  There are two elements to the Scheme; ‘Open' and ‘Closed', reflecting whether the employees primary place of work has been ordered to close by Government.

Alongside the now customary ‘Fact Sheet' (which professional advisors will point out is of even more dubious legal weight than the usual Guides), we also have the Policy paper issued by HMRC.

The Policy paper is littered with references to forthcoming guidance and clarification, but it is already clear that there are a number of areas where the revised Scheme differs markedly from the current furlough scheme which is due to end this month.

First, in respect of the Open Scheme there is a specific condition regarding financial impact on the employer.  For those with 250 or more employees, the ‘turnover test' requires a comparison of VAT payable in period 31 August 2020 to 7 November 2020 with that from the same quarter in 2019.  If the figure is the same or lower, the financial test will be satisfied. Those employers with less than 250 employees and those in the charitable sector are exempt from this test.  

Secondly, payments under the Open Scheme will be made in arrears.  It is clear that no claims can be made before early December, so there will be greater cashflow strain for some employers, particularly where staff are paid weekly.

Thirdly, there is more focus on identifying those employers claiming under the Scheme.  The Policy paper states that HMRC intends to publish the names of employers who have used the Scheme. Similarly, it is clear that employees will be able to access confirmation as to whether their employer has claimed in respect of them via their Personal Tax Account. It is explicitly stated that there will be penalties imposed on those employers who have over claimed, and they may be ‘named and shamed'.

While much remains unclear, there are two welcome clarifications.

The first is that employers are expressly permitted to ‘top up' payments of those staff in respect of whom a claim is being made.  This is a welcome change, and is some comfort for those employers and employees whose pay substantially exceeds the amount of the Scheme caps on salary.  It will help make it more likely that agreement with employees will be reached, thus avoiding the likely alternative of redundancy which is after all the stated purpose of the Scheme.

The second relates to the emphasis on the agreement with staff being specifically agreed, clearly documented, available for inspection by HMRC, and retained by the employer for five years.

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