To wonder how much scrutiny companies using the furlough scheme will come under when they file their end of year accounts?

[Ethelfleda]

I’m sure the savvy of mumsnet will be able to put me right on this (and I welcome it, please!)

If a company furlough’s its workers, and then effectively takes taxpayer’s money to pay their wages... and then they declare profits at the end of the year and pay dividends to their share holders... would this not raise a few eyebrows at HMRC?? Or is that far too simplistic?

How much do you think the books will be scrutinised after all of this?

I also know of a company who has furloughed all its workers, including their accounts staff, when they have large outstanding amounts owed to much smaller companies. The smaller companies in question cannot get their invoices paid as there are no staff there to pay them. Which effectively disrupts the cash flow of the smaller company which could, in turn, lead them to have to furlough their workers.

On the whole, this is seemingly a very good scheme but I just wonder to what extent it will be policed?? And to what extent some businesses will take advantage...

HMRC should be looking at reserves and claiming back payments if they are great. People like certain designers who have failing/loss making businesses and are using tax payers money to keep them going annoy me. As do really rich people who own companies but put diddly squat into them and expect hand outs. I also hope that reports of staff having to work whilst furloughed are investigated and the business owners charged/penalised.

On the whole, this is seemingly a very good scheme but I just wonder to what extent it will be policed??

Not at all for the most part. We don't really do enforcement in this country.

As for making profits and pay shareholder dividends, there is nothing at all in the scheme to forbid that, so no-one will even be checking.

It might, but we won't know until we start to get court cases coming through (if any do). HMRC might decide it's not worth pursuing.

The furlough scheme is to help with immediate cash flow problems, which don't necessarily have an impact on year end reserves available to be paid to shareholders. It is designed to keep people in work as the effects on the economy of mass unemployment and companies folding across the board would be far more expensive than the furlough scheme ever could be.

A company may be very profitable but still experience short term cashflow crises. This is an extraordinary set of circumstances and even usually very successful companies may be struggling at the moment.

Don't confuse cashflow problems with company capital.

Thank you Lockhheart that makes sense.

I wish we'd follow the example of France and exclude those multi-national corporations who don't bother paying any tax here - but our government couldn't care less about that, and HMRC are too busy trying to persecute small-time tax dodgers.

I think there will be quite strong policing.
Using the PAYE system to pay the 80% means existing processes will capture exactly what each employee receives in gross pay and deductions such as NI, Tax and Student loan repayments. Employers are required to send this on a real time basis to HMRC so they will have accurate records of what has been paid.
Employers also have long established processes to submit corporate returns and as now the two will be cross checked.
HMRC have vast experience of detecting fraud and I am sure they will cross check and look for anomalies.
The more complex issue is the self employed where the processes did not previously exist.

I think there will be quite strong policing.

I very much doubt it.