The Treasury Direction (TD) under the Coronavirus Act 2020 sets out the legal framework for the scheme and was last updated on 25 June 2020.
The Coronavirus Job Retention Scheme (CJRS) was introduced to protect jobs and HMRC has stated in its guidance:
‘the person making the claim accepts that:
(a) a payment made pursuant to such claim is made only for the purpose of CJRS and
(b) the payment must be returned to HMRC immediately upon the person making the CJRS claim becoming unwilling or unable to use the payment for the purpose of CJRS.
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.’
Ethical requirements for accountants
Ethical behaviour by advisers is critical, to ensure businesses and individuals understand government initiatives and that public funds are used as intended.
The work carried out by an adviser needs to be trusted by society at large as well as by clients and other stakeholders. What a member does reflects not just on themselves but on the profession as a whole.
ACCA members are reminded that they should continue to observe ethical standards as set out in the Code of Ethics and Conduct. The fundamental principles include:
- Integrity – to be straightforward and honest in all professional and business relationships.
- Objectivity – to not allow bias, conflict of interest or undue influence of others to override professional or business judgements.
- Professional competence and due care – to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques, and act diligently and in accordance with applicable technical and professional standards.
- Confidentiality – to respect the confidentiality of information acquired as a result of professional and business relationships and, therefore, not disclose any such information to third parties without proper and specific authority, unless there is a legal or professional right or duty to disclose, nor use the information for the personal advantage of the member or third parties.
- Professional behaviour – to comply with relevant laws and regulations and avoid any action that discredits the profession.
Examples of areas of concern
Examples of abuse that HMRC will target include:
Employer benefit fraud
- where an employer purports to place an employee on furlough in order to access the scheme, but in fact has instructed that employee to work, provide services or generate revenue for that employer
- where the employer does not pay the full furlough entitlement to the furloughed employees.
Employee benefit fraud
- where an employer seeks to allow an individual not ordinarily employed by them to be regarded as an employee for the purposes of the scheme, so that the scheme will provide funds for the individual that they are not entitled to.
HMRC has put in place a fraud hotline (telephone 0800 788 887) and an online whistle-blower service based on a structured email form, for employees and the public to report suspected fraud in the furlough scheme.
Advice for accountants
ACCA members are strongly advised to review the suite of technical factsheets Professional Conduct in Relation to Taxation (PCRT), especially Helpsheet C dealing with errors. There is also new interim guidance drawn up to help members working with clients who have made claims under the Coronavirus Job Retention Scheme to help them comply with relevant professional obligations (see below for details).
Professional accountants should consider the following:
- ensure that clients understand the rules relating to the furlough claim and have systems in place to ensure compliance
- if they become aware that an employer-client is breaching the rules (for example an employee is carrying on work while on furlough), advise the client accordingly and ask the client to rectify the error. A member should keep sufficient appropriate records of discussions and advice given
- if the client rectifies the error (and repays the ‘overclaimed grant’), the accountant is free to continue to act for the client
- however, should the client ignore such advice and guidance, the accountant must:
- cease to act
- inform HMRC of their withdrawal
- submit a suspicious activity report to the National Crime Agency (see ACCA’s guidance on making a suspicious activity report)
- consider carefully their response to any professional enquiry letter (also known as professional clearance letter).
Accountants should also be aware of their obligation on engagements in assisting a client to apply for any other government support measures such as Bounce Back Loans and the use of ‘Time to Pay’ arrangements. Accountants should fully explore what support is available for their client’s actions ethically and within the law. A professional accountant shall not be allowed to be associated at any time with information that they believe to be wrong or misleading.
Conclusions
ACCA members should:
- Act correctly from the outset.
- Keep sufficient appropriate records of discussions and advice. This will be especially relevant for SEISS claims where conditions of eligibility have changed over the course of the various grants being available and the fact that agents were not able to make claims on behalf of their clients but will be involved in the submission of tax returns that include SEISS grants received. We will be publishing guidance under PCRT for SEISS claims (similar to the guidance for CJRS claims mentioned above) in due course.
- When dealing with errors:
- give the client appropriate advice
- if necessary, so long as they continue to act for the client, seek to persuade the client to behave correctly
- take care not to appear to be assisting a client to plan or commit any criminal offence or to conceal any offence which has been committed
- once aware of a possible error, bear in mind the legislation on money laundering and the obligations and duties which this places upon them.
- in appropriate situations, or where in doubt, discuss the client’s situation with a colleague or an independent third party (having due regard to client confidentiality).
