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Furlough receipts by investment company director

Should I advise my director client to repay money claimed under the furlough scheme?

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What is the community’s view on a director of three residential property investment companies, and a small trading company managing residential property claiming furlough payments in the following circumstances?  The director (being the only employee) claimed furlough for his salary  in each of the investment companies despite the businesses not having been impacted by Covid.  The management company continues to pay a salary and the three investment companies are my clients.  I accept directors are able to claim furlough but on the basis that, in simple terms, the day-to-day business is no longer able to function or, for large businesses, runs at reduced capacity (without going into childcare or illness etc eligibility, none of which apply).  However, in this case rent collection may have reduced if a tenant is struggling but overall I can’t see an impact to the business.  I shall be grateful for readers’ views whether I should advise my client to repay the furlough money as my client believes that he has not breached the eligibility criteria.

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By LukeS
04th Feb 2021 16:57

Not the best place to ask, as most on here think claim for anything as it's not the government's money anyway, sod the eligibility.

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By Wanderer
04th Feb 2021 18:08

Luke, you are in danger of becoming a single issue poster troll. You were wrong in the Local Authority thread you are, no doubt, referring to. This is a completely different set of circumstances.

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By Hugo Fair
04th Feb 2021 17:13

Although all the guidance is woolly, the very first sentence on the scheme says "If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant .."
So can your client show that he could not maintain his workforce (i.e. continue to pay himself) because of the effect of CV - unless he claimed for furlough?

There are also specific regs regarding Directors - such as:
* "Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned." Did this happen?
* Whilst on furlough "they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company." Hand on heart did the director do none of these activities?

So, without getting into the 'morality' issue (which I feel is clear-cut), I'd say (based on the OP info) that the claims were made 'in error' and should be re-paid.

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Replying to Hugo Fair:
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By Paul Crowley
04th Feb 2021 18:53

Nicely put and well referenced

Too many think 'free money'

But basis was always Covid based loss of income

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By Paul Crowley
04th Feb 2021 17:16

A bit like LUKE

What was he doing before, that stopped being done sufficiently to justify furlough

In furlough did he do more than statutory required directors obligations
Did he do anything that resulted in income?

Was he at risk of losing his job, enough to justify honest tax payers to subsidise his comfortable lifestyle?

In short was the claim abusive and was his statement that it was not abusive in fact ABUSIVE?

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By Wanderer
04th Feb 2021 18:14

You need to go back to the legislation rather than rely on the woolly guidance.

Referring to the (currently) latest regulations they include:-

Quote:
2.1 The purpose of CJRS is to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of employees who are within the scope of CJRS arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.
Quote:
2.6 No CJRS claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purpose of CJRS.
Based on the brief facts given it appears that your client's claim is in contravention of 2.6.
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By ireallyshouldknowthisbut
04th Feb 2021 18:40

There are also the basics such as if they did any work.

The rules for the first set of claims were on a "no work" basis.
Then in the summer it moved to a "flexi" basis.

if the business was running then chances are its a busted flush and they were doing more than minimum statutory duties.

I would insist its repaid, if not then resign, dob em in and wave goodbye.

I used the words this week (not relating to furlough) "no I cannot make a fraudulent claim, and then help you to conceal it" When you put it like that.......then tend to get the hint.

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