Some franchised car dealers have been accused of abusing Government’s Job Retention Scheme (JRS) as businesses across the UK prepare for the opening of the HMRC's portal to register for the salary support.
HMRC chief executive Jim Harra outlined details of the application process and revealed that the opening date for applications would be April 20 in a letter distributed yesterday (April 8).
But as many car retail businesses were poised to take advantage of the scheme in a bid to safeguard their business during the current COVID-19 coronavirus lockdown, it was alleged that others with furloughed staff were attempting to exploit the scheme.
Ian Ferguson, the founder of car retail dispute resolution business RejectMyCar.com, said that he had uncovered evidence that the JRS scheme was being abused by some car retail groups whose furloughed staff have continued to work in direct contravention of the scheme’s rules.
Taking to LinkedIn, Ferguson said: “I’ve had a number of emails from staff at dealer groups saying they were furloughed, but then told separately to answer, deal with, take deposits and order bank deals after lockdown.”
Ferguson urged employees being asked to work while furloughed to get in touch with him, allowing him to alert the appropriate authorities through anonymised testimony.
He added: “This is taxpayer money, meant to help struggling businesses, not to shore-up over-indebted gin palace dealer groups.”
Tax authorities have set up a hotline for workers to whistle blow and Harra said in an interview this week that any firm caught abusing the system “would not be entitled to the furlough payments”.
Luscombe Motors owner, Robin Luscombe, suggested that he had seen evidence of ongoing car retail activity during the lockdown in a response to Ferguson’s post.
Luscombe, who has furloughed the teams at his Suzuki and Mitsubishi dealerships in Leeds, said: “I am personally handling all emails and it’s amazing how many people think they can buy a car now.”
He said that his correspondence with customers had suggested many were “going elsewhere”.
“Somebody is selling cars, risking lives, flouting restrictions,” Luscombe said, adding: "A few quid is worthless if you are putting lives at risk.”
In a recent Auto Trader webinar, a few questions from dealers were around whether furloughed staff could do training or any other tasks for the business, ias the definition under the scheme was that furloughed personnel could not generate revenue or services for their employer.
JRS application process
ASE chairman Mike Jones this week suggested that HMRC might have more than a fraud issue in its immediate future, with the potential for a system crash when the JRS portal goes live in 11 days’ time.
Nine million people are expected to be enrolled on the scheme and “everyone will want the cash in time for this month's payroll”, he said.
Harra said in an interview this week that HMRC’s servers had been tested for 450,000 claims an hour, and a total of 5,500 staff will man a JRS helpline.
Guidance on the application process highlighted that businesses using a payroll bureau on a file only basis and not a PAYE agent will not be able access the service portal.
It advised: "Please check with your payroll bureau to find to ensure that they can operate the service. If they cannot, they will be required to assist you in providing the necessary data that you will need in order to enable the business to calculate the salary, NIC and pension amounts in order to submit a claim."
Payments from the JRS are expected to take between four and six working days to process, Harra said.
Last weekend Government clarified the details of its JRS scheme to make clear that “regular commission payments” could be included in the calculation of the 80% of an employee’s monthly wage (up to a £2,500 cap) that would be covered by the scheme.
This followed calls for more lucid description of the scheme’s guidelines by the National Franchised Dealers Association (NFDA) and a change.org petition set-up by the Independent Motor Retailers Association (IMDA), which attracted more than 27,000 signatures.
HMRC will calculate the commission payment that can be included in its calculations of an employee’s wage using the same month’s earning from the previous year or average monthly earnings for the 2019-2020 tax year, according to Lawgistics.
The motor trade legal consultancy gained clarification of the guidelines yesterday to bring an end to confusion surrounding what retailers would be able to reclaim from the JRS scheme.
- The latest guidance on CJRS can be found on GOV.UK by searching for 'Coronavirus Job Retention Scheme'.