How much work is working? A firm stance on furlough

Support payments under the coronavirus job retention scheme (CJRS) were made available to prevent a wave of redundancies in industries and sectors seriously affected by the coronavirus pandemic. To be eligible under the original CJRS rules from March 2020 to June 2020, an employee had to be placed on furlough and do no work for the employer for a minimum of 21 consecutive days. A recent case highlights HMRC’s increasing use of social media to harvest information. In this case, the employee concerned had posted a number of Facebook updates to try to keep the business in the public eye whilst it was unable to operate, during the period in which they had been furloughed.

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, it claimed total furlough payments of £9,486.

Its social media postings in April 2020 dropped from the usual 80 or 90 posts to just three. The employee estimated that they spent five minutes on these posts. 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 argued that the postings were not work for the purposes of the CJRS, as there were no customers and no income when this was done, and pointed out that the company operated exactly the kind of business this scheme had intended to help. It also pointed out that the rules were complex, hard to follow and constantly changing.

The tribunal had no jurisdiction over 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 for CJRS support. That being the case, flexible furlough in the subsequent furlough 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 support scheme.

It is well known that HMRC gathers data to find tax errors and it is entirely right for it 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 other rules and guidance at pace is that they may lack nuance, and any guidance available may, in any event, be limited or subject to change. The net result here is that businesses may feel like they are being disproportionately punished for minor infringements that they were not 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 survive after the pandemic, 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 themselves.