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Dealers warned they face heavy penalties for making furloughed staff work

Time 1 year ago

Dealers are being warned they face having to pay back all the money they received for furloughed employees if they still had those staff members working for them while on leave.

It comes in the wake of a report that revealed that more than a third of people on the Coronavirus Job Retention Scheme had been put under pressure by their bosses to work.

As reported by Car Dealer, a survey by Crossland Employment Solicitors of 2,000 furloughed full-time staff across various sectors found that 34 per cent of them had been asked to return, even though employers can only make furlough claims if their staff can’t work because of the pandemic.


A third of furloughed employees were asked to continue doing their usual job, while 29 per cent were told to carry out more administrative tasks. Meanwhile, 20 per cent had been asked to either cover someone else’s job or work for a linked company.

The government recently announced plans to give employers 30 days to admit any furlough fraud, after fears the system was being abused. Legislation is also set to be introduced granting powers for HM Revenue & Customs (HMRC) to impose penalties and chase directors of insolvent companies personally.

Nona Bowkis, solicitor at consultancy firm Lawgistics, which provides specialist law advice and support for the motor trade, told Car Dealer Magazine: ‘As soon as the furlough scheme was announced, our advice made clear that HMRC will penalise those who abuse the furlough system.

‘We advised dealers to write to all employees to make clear that they cannot work for the company while furloughed and to keep those letters and all other related records for five years.


‘For anyone who furloughed staff but had them working on the quiet, we now know that HMRC will be seeking to tax those furlough payments at the rate of 100 per cent, meaning the entire furlough payment will need to be repaid.’

She added: ‘If a director thinks they can avoid repaying that furlough payment by making the company insolvent, they could find that HMRC will pursue them personally. There is also the possibility of criminal prosecution for deliberately fraudulent claims.

‘Interestingly, employers are to be given a 30-day amnesty to admit any wrongdoing, but once that deadline is passed directors will be at the mercy of HMRC’s considerable powers.’

Industry braced for more job losses as crucial furlough scheme deadline date approaches

Guide: How can I get my dealership staff back to work and other furlough questions

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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