A new piece of legislation that has been put before parliament called the Finance Bill could offer companies that furloughed staff without fully meeting the rules of the scheme with a way out.

The Coronavirus Job Retention Scheme (CJRS) set up by the government allowed firms to furlough staff with 80% of their wages being met by the state. However, this scheme also had strict conditions attached to it, and firms found to be in breach of these faced having to repay cash received as well as additional penalties, which had the potential to be ruinous for small firms in particular.

It is these penalties that the bill would remove, as it would allow firms that have not met the CJRS rules to repay grants to HMRC without being punished for this. These will be reclaimed by setting a tax charge for the full amount of the CJRS money.

Speaking to Pinsent Masons, expert in tax disputes Andrew Sackey said:

“An important condition of the CJRS is that furloughed employees cannot undertake remunerative work for their employer. However, head office staff may be unaware that, in practice, local managers have been asking furloughed staff to work.”

If the bill passes, it would apply to both deliberate and accidental instances of wrongful claims and could be vital for smaller businesses. They can also get specialist advice from a business accountant in South Yorkshire or wherever they are headquartered if they are not sure whether they have breached the rules or not.