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HMRC Clarification on Furlough Scheme Requirements

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I have been given permission by HMRC to publish this letter.

The author of the letter works within the office of Jim Harra, HMRC Chief Executive and First Permanent Secretary, and is speaking on his behalf.

It deals with the seeming discrepancy between paragraph 6.7 of the Treasury Direction, which requires employees to agree to cease all work in writing, and the HMRC Guidance, which states that written agreement from the employee is not necessary (see my earlier bulletin here).

HMRC has now stated that employers should follow the Guidance (and that they will treat applications for reimbursement under the Furlough Scheme in accordance with the Guidance).  The crucial paragraph from the letter is this:-

"...the employer and the employee must reach an agreement and an auditable written record of this agreement must be retained. It does not necessarily follow that the employee will have provided written confirmation that such an agreement was reached in all cases."

Whilst one might fairly take issue with whether that squares perfectly with the wording of the Direction, it a helpful, clear and unequivocal statement from HMRC that they will not deny an employer the ability to reclaim funds simply on the basis the employer had not obtained written agreement from the employee to cease all work for the employer.

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