Coronavirus

Job Retention Scheme hurts big businesses, says MHA MacIntyre Hudson

Larger businesses may be at a disadvantage due to the government’s new Job Retention Scheme, according to MHA MacIntyre Hudson.

Nigel Morrison, the accounting firm’s tax director, issued a warning that some businesses are at risk of exclusion from the scheme’s support.

Yesterday (24 September), Chancellor Rishi Sunak announced the Job Retention Scheme will provide employees 33% of their wages for unworked hours, providing they work 33% of their normal hours.

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Morrison said: “We’ve seen some businesses ‘bounce back’ and may find they match last year’s performance or experience just a small drop in turnover. But in such a volatile economic environment this may not last; the next six months could be very different. 

“The Coronavirus Job Retention Scheme has been very complex for businesses to administer, and much of the over claim error rate, understood to the up to 10%, has resulted from these complexities.” 

He added: “It’s important the new scheme is simple to administer, but robust enough to avoid fraud and properly target support. Otherwise we will see more fraud, errors and mistakes. The ‘guaranteed’ 77% gross pay rate seems generous, especially compared to the Coronavirus Job Retention Scheme, where support is reduced to 60% from 1 October 2020.

“The scheme should work well where employers can’t provide enough work for employees, but there are sadly many cases where employers can’t provide any work at all.  A targeted scheme for employers who can’t provide a ‘base’ level of work should potentially also be considered.”

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