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Posted : 20 Apr 2020 at 09:17:47
Category: Important Announcement

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The government’s Job Retention Scheme (JRS) goes live at 8am today, Monday 20th April.

However, there are warnings that the cost of the scheme has spiralled and that many construction workers will not be able to benefit.

The chancellor announced the JRS on 20th March to enable employees to remain on the payroll through being ‘furloughed’. Employers need to claim the cash grant from HM Revenue & Customs.

HMRC has put in place an online application service, which it says can handle up to 450,000 applications an hour. Employers should then receive the money to pay their employees within six days, enabling them to meet the April payroll, it says.

HMRC emailed two million employers on Friday providing a link to a five-step guide to claiming, as well as warning them to be aware of scams circulating.

The Job Retention Scheme as initially announced has since been extended by one month to the end of June.

According to tax accountancy firm Blick Rothenberg, the total cost of the scheme could now cost £50bn.

Nimesh Shah, a partner at the firm, said that JRS would provide security to workers but he questions whether the government could afford it. “The increased cost to the government is alarming and questions need to be asked as to how this will be funded in the years to come.”

He added: “The JRS has been the cornerstone of the government package of support during the Covid-19 crisis. When the scheme was first announced, the original cost estimates were around £10bn. With the take-up of the scheme being higher than expected, with almost nine million workers being placed on furlough, that cost estimate was revised upwards to £30-40bn. With the extension to the scheme until the end of June, the total cost will be in excess of £50bn.”

It also looks like many construction workers are shut out of the scheme.

Despite what has been stated in the official guidance, there are no provisions to deal with the large numbers of people working under umbrella contracts, agency workers and those self-employed but taxed using PAYE due to IR35, onshore employment intermediaries or other legislation. 

Barrister Jolyon Maugham QC has studied the small print of the scheme. He said: “Any worker earning below £2,500 whose pay is conditional on being asked to do shifts (i.e. the very essence of casual labour) is, in effect, ineligible for the scheme.”

This means many firms will have incorrectly paid out money to workers based on official guidance and subsequent grant claims will be invalid and vulnerable to clawback by HMRC for the next five years.

It also means many temporary workers will now be left with nothing if their employers had waited to see the legislation before implementing the scheme.

Original Source - The Construction Index

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