HMRC has said the portal to process furlough payments will be open on April 20 – but experts warn it could be ‘tested to its limits’.
With nine million people – far more than the government planned for – placed on furlough leave, the portal that has been designed to pay money back into businesses bank accounts to pay staff will be opened on Monday.
Many businesses will have either already paid out furlough payments to staff in April, or will need to at the end of the month, and it is vital that cash is paid back into firms’ bank accounts as soon as possible.
Many car dealerships will be experiencing cash flow problems so it is vital that the money from the government arrives quickly.
However, in a LinkedIn post, chairman of accountancy firm ASE Global Mike Jones warned that the system ‘will no doubt be tested to the limit’.
Speaking to Car Dealer Magazine today he added: ‘Motor retailers have, rightly, made extensive use of the furlough scheme as they have had to completely shut their showrooms and partially power down the rest of the business.
‘The receipt of the furlough cash to enable them to pay their staff is vital, particularly with the business interruption loan scheme taking far too long to process loans.
‘Everyone will be rushing to process their claim as soon as possible and I sincerely hope that HMRC have built this into their planning as a significant delay in this cash, with no bank support, could prove fatal for many.’
On Friday, firms were warned they could fall foul of the law if they refused to pay sales staff properly under the scheme. Car Dealer Magazine has been contacted by a number of sales people who have been told they won’t be paid commission for the sales they made in March – strictly against guidelines
There has been much confusion around whether commission can be considered in furlough payments, but HMRC, legal experts and accountants have all confirmed it can.
However, now the rush will be to get staff registered on the HMRC portal in the hope the cash is paid back into businesses’ accounts before they run out of cash.
David Kendrick, a partner at UHY Hacker Young, said dealers should be concentrating on detailed cash flow forecasts.
He added: ‘A huge number of banks are now being supportive and doing all they can to ensure no business fails due to Cashflow and I’d say even more so around the month end.
‘Everyone is facing real challenges, but I would urge people to try and be rational and work with their employers – let’s hope the portal works well and is simple for applications to be made and fulfilled.’
Kendrick – who will be appearing on Car Dealer Live this Friday at midday – said dealers shouldn’t ‘panic’.
He added: ‘Support is being made available as quickly as the government and financial institutions can realistically make it happen. There are unchartered waters and I believe they have done a fantastic job so far.
‘I would hope all dealers now have a detailed cash flow forecast for the next three-six months that is monitored daily and updated regularly to ensure they are well positioned and can act should they need to.
‘The cash flow benefit of the VAT being postponed should have bought a lot of dealers breathing space for the short term you would have hoped.’
Watch accountants and legal experts discuss all you need to know about furlough payments and commissions in this week’s Car Dealer Live broadcast below