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Activity When Furloughed - Advise grant repayment?

A client has been active when previously he had advised he was furloughed

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I am preparing a set of accounts to 31 October 2020 for a client who is an engineer, having seen his VAT returns and his bank statements for the first time, it is clear that he has been active in the periods where he has previously stated that he was furloughed. The activity isn't a lot, but even so, the March to June claims are clearly incorrect. He has also claimed full furlough for July to October, despite at least a small amount of activity.

The client does seem to be an honest type of person, and I imagine that the activity is just him pottering about whilst lockedown at home given that he's an engineer. Strictly, he should repay all of the furlough for March to June, and some of the furlough from July to Oct, and if he doesn't agree to this I guess it's an AML report? I would be interested to hear other peoples thoughts.

Too immaterial to worry about? It's fair for him to claim it given the lockdown that's been imposed on his business? My feeling is that it is not. 

I imagine that a number of accountant's are going to have this problem this year.

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A Putey FACA
By Arthur Putey
08th Jan 2021 11:55

By "activity" I assume you mean he has made purchases. I hear what you are saying, but provided he hasn't done any billable work then you might be worrying unduly, perhaps he was just keeping his hand in, training if you like. Training is allowed. As you don't do the VAT returns you might want to ask him what the inputs relate to, and if he has been doing people favours politely suggest that some costs might be disallowable if they are not for the purposes of the trade.

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Replying to Arthur Putey:
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By chrisacc1985
08th Jan 2021 12:20

Thanks Arthur. I hadn't thought of training/favours. Certainty possible, and so I will discuss it with him.

He hasn't done any billable work. Most expenses probably could be overlooked as training, he did spent £264 on skip hire in August , however, which looks like it might have been him having a clear out?

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A Putey FACA
By Arthur Putey
08th Jan 2021 13:53

Maybe his kids volunteered to tidy the workshop and fill the skip. I wouldn't get too excited about it, especially if you didn't prepare/submit the CJRS claims. If he'd been trading that would be another matter.

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By the_drookit_dug
08th Jan 2021 12:04

If he's only done, say, a day or so in March-June, you could look at whether he's had 3 weeks either side and consider if it would be possible to just pay back the day he worked - maybe check with HMRC and keep evidence for your file.

If he's worked at a low level throughout, then it's more tricky.

Folk can be so stupid. It was made abundantly clear that no work should be undertaken while furloughed. Many who wouldn't dare steal even a grape from a fruit & veg shop have a surprisingly cavalier attitude to tax evasion and furlough abuse.

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Replying to the_drookit_dug:
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By chrisacc1985
08th Jan 2021 12:34

Definitely no paid work. it does just look like pottering about, and so probably a low level throughout. Possibly can pass as training/keeping hand in.

I did state in each furlough claim email that you could only carry out statutory work and training.

I think in this instance it's more directors thinking that they must be entitled to something, given all of the money the government has been handing out.

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RLI
By lionofludesch
08th Jan 2021 12:58

You need to have a careful chat with him about exactly what he's been doing.

There isn't enough information here to give a definitive answer. The skip is the tricky one for me. I don't think HMRC guidance is all that clear on whether chucking out some old stuff counts as "work" for these purposes.

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Replying to lionofludesch:
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By paulwakefield1
08th Jan 2021 13:48

Might have been for personal stufff (Lord alone knows I could easily fill a skip with accumulated debris!) and shouldn't be charged to the business.

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Replying to paulwakefield1:
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By C Graham
13th Jan 2021 10:45

quite possible to have business expenses - these do not stop just because of furlough and I know many have chosen to use the downtime to sort out stuff they never normally have time to do. Sorting out a messy office is not work unless you are a cleaning company. Though was it an allowable expense (all for business no personal use)

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