Furlough payments were made to prevent a wave of redundancies in seriously affected industries. To be eligible under the original rules from March 2020 to June 2020, the employee had to do no work for the company for a minimum of 21 consecutive days. A recent case (Glo-Ball Group Ltd v HMRC [2023] UKFTT 435 (TC), see last week’s Tax Journal) highlighted HMRC’s increasing use of social media to harvest information. In this case, the employee concerned posted a number of Facebook updates to try to keep the business in the public eye.
The company, which specialises in arranging communal activities such as discos, parties and after school clubs, was severely impacted by lockdown. Between 23 April 2020 and 18 December 2020, the company claimed total furlough payments of £9,486.36.
Their social media posting in April 2020 dropped from the usual 80 or 90 posts to three. An estimated five minutes was spent on these. Over the following months, a limited number of additional posts were placed on Facebook. HMRC took the view that these posts meant that the employee had not stopped working for the requisite 21 consecutive days and was ineligible for furlough payments.
The taxpayer tried to argue that the postings were not work, as there were no customers and no income when this was done, and pointed out they were exactly the kind of business this scheme had intended to help. They also pointed out that the rules were complex, hard to follow and constantly changing.
The tribunal had no jurisdiction about the fairness of the law but held that any work during the early period of furlough, including social media posts for marketing purposes, made the employee ineligible. That being the case, flexible furlough in the subsequent period was also not available, as one of the conditions for this was that the employee must have been eligible for payments under the original version of the scheme.
It is well known that HMRC gathers data to find tax errors and it is entirely right for them to do so. HMRC and the courts can only enforce and interpret the law put in front of them. However, a consequence of introducing legislation and rules at pace is that they may lack nuance. The net result here is businesses may feel like they are being disproportionately punished for minor infringements that they weren’t aware breached the rules. How many other businesses may fall victim to having their furlough payments clawed back because of some trivial action intended to help the business, that they believed to be so minor as to be irrelevant? If this case is illustrative of HMRC’s policy in prosecuting cases, then many more businesses could have a future furlough shock in store for them.
Furlough payments were made to prevent a wave of redundancies in seriously affected industries. To be eligible under the original rules from March 2020 to June 2020, the employee had to do no work for the company for a minimum of 21 consecutive days. A recent case (Glo-Ball Group Ltd v HMRC [2023] UKFTT 435 (TC), see last week’s Tax Journal) highlighted HMRC’s increasing use of social media to harvest information. In this case, the employee concerned posted a number of Facebook updates to try to keep the business in the public eye.
The company, which specialises in arranging communal activities such as discos, parties and after school clubs, was severely impacted by lockdown. Between 23 April 2020 and 18 December 2020, the company claimed total furlough payments of £9,486.36.
Their social media posting in April 2020 dropped from the usual 80 or 90 posts to three. An estimated five minutes was spent on these. Over the following months, a limited number of additional posts were placed on Facebook. HMRC took the view that these posts meant that the employee had not stopped working for the requisite 21 consecutive days and was ineligible for furlough payments.
The taxpayer tried to argue that the postings were not work, as there were no customers and no income when this was done, and pointed out they were exactly the kind of business this scheme had intended to help. They also pointed out that the rules were complex, hard to follow and constantly changing.
The tribunal had no jurisdiction about the fairness of the law but held that any work during the early period of furlough, including social media posts for marketing purposes, made the employee ineligible. That being the case, flexible furlough in the subsequent period was also not available, as one of the conditions for this was that the employee must have been eligible for payments under the original version of the scheme.
It is well known that HMRC gathers data to find tax errors and it is entirely right for them to do so. HMRC and the courts can only enforce and interpret the law put in front of them. However, a consequence of introducing legislation and rules at pace is that they may lack nuance. The net result here is businesses may feel like they are being disproportionately punished for minor infringements that they weren’t aware breached the rules. How many other businesses may fall victim to having their furlough payments clawed back because of some trivial action intended to help the business, that they believed to be so minor as to be irrelevant? If this case is illustrative of HMRC’s policy in prosecuting cases, then many more businesses could have a future furlough shock in store for them.
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