The Positive Accountant - Vol 2 Ed 36
Updated: Aug 5
I had an interesting phone call this week from George (name changed).
George operates a franchise business. The basic deal is that he paid a lump sum and an ongoing royalty to use the name of a larger business, but operates independently subject to periodic audits to ensure he is giving a consistent 'brand experience'.
He operates in the service sector and in March felt the need to furlough a significant number of staff. They were all dealt with properly, were stood down, paid (100% not the legally allowed 80%) and the grant claimed from HMRC.
Imagine George's face when a circular arrived from 'head office'. It said something along the lines of 'As a brand we do not want to be seen to be taking advantage. Where franchisees took advantage of the furlough scheme but, with hindsight, did not need to, we are requesting that they voluntarily pay the furlough grant back to HMRC'.
His reaction was to go into orbit quicker than a North Korean rocket.
Having calmed down (a tiny bit) he rang me and asked my opinion.
Which, for the record, is as follows.
The Government launched the furlough scheme with some stringent requirements. The business at the time felt the need to take advantage of the furlough scheme. The employees concerned stayed at home and did not work, the business paid them and recovered 80% of the cost back from HMRC. All of this was entered into in good faith based on the best judgement at the time.
With the benefit of hindsight maybe the business didn't need to have taken such action. But it did, based on best judgement at the time. And if the business voluntarily repays the furlough grant it will have itself paid its employees to stay at home and do nothing (the employees won't be refunding their furloughed wages). So the business should no more morally have to repay the furlough grant money than it should, for example, at the end of the year say 'our tax bill is 19%. But we don't know what to do with the money and the Country has a vast fiscal deficit so we've decided to pay 50% instead'.
The business has taken advantage of a Government scheme. It qualified in every respect. Virtue signalling has no place in the tax or support system.
I thought- or perhaps hoped - this was a one-off situation. Only to get a call a few hours later from two other clients in different industries faced with the same question. Hence why I thought I'd publicise my view a bit more widely
Which is all a bit disturbing...
What are my positives today ?
1. Sylvia has some clean accounting records
Sylvia keeps immaculate manual accounting records.
The year end was all ready for me to pick up, in a paper bag on the dining room table.
Over the weekend Sylvia went out, at exactly the same time that a pipe in the bathroom - immediately above the dining room table - decided to leak.
I am told that her immaculate accounting records are now cleaner than ever - hanging on the washing line, with each and every receipt laid on the lawn with a coin on top.
I've been promised a picture ...
And yes, I think it must count as Money Laundering.
2. Silly Signs continue to arrive (AGAIN)
Sometimes when you start something it can't be stopped...
Two from Gary,
'Please note that this door is not a door'. Um, say again ?
and
'Do not park here if this sign is under water'
3.
Aimed at the self employed, the second tier of grants can be claimed between 17th August and 19th October.
The qualification criteria is the same as the first round, the payment is 60% not 80% of self employed average profits. The claim needs to be made by the taxpayer again (ie sorry, but I can't do it for you)
The grant is available for all those businesses adversely affected at the date of the second claim. Conceivably there will be people who could therefore claim for the first grant but can't for the second (eg business has recovered) and some who couldn't claim for the first who can for the second (eg business was OK but not now)
Stay safe, stay positive
The sun still shines, the flowers still flower