After two days of confusion about who said what to whom on the issue of furloughing, it is looking very likely that PACT has either been given some duff advice from someone or other at HMRC or entirely misinterpreted what they have been told.
The trade body rewrote the advice to their members on Thursday to suggest that a number of preconditions would have to apply for employers to be able to furlough their freelancers including:
“(The) contract must have been suspended due to the impact of Covid-19 with some remaining work still to be done under the contract, and the prospect of returning to complete that work at some point in the future” (PACT advice to members 9th April)
It seems however that that opinion does not accurately reflect the Treasury’s actual position on things. The guidelines say something very different of course, clearly suggesting that any worker can be re-contracted (or have their contract extended) and then be furloughed until the scheme ends, whatever the reason – not just because of Covid-19 – assuming of course that the worker was on payroll on February 28th.
And on Saturday, in a stunning demonstration of clarity in a world where matters rarely seems certain, HMRC Customer Support publicly put PACT right on precisely that point. As far as they were concerned, nothing had changed in terms of the preconditions for furloughing and PACT had got it completely wrong:
Added to that, a host of freelancers also had it confirmed by HMRC that their contracts could be extended or they could be rehired, irrespective of whether they had come to a “natural end” or not:
And as if that were not enough, when HMRC was presented with the circumstances in one of PACT’s examples of a case they said was not eligible for furloughing, they gave completely the opposite view:
PACT’s example (highlighted)
A number of companies have already started to contact their freelancers suggesting that, based on PACT’s advice, they now might be suspending their furloughing offers, however all the above would throw some doubt into the need for that. While the guidance remains unchanged and while HMRC is firmly contradicting the advice that PACT is giving to its members, those recommendations are starting to look somewhat hasty and badly written, to say the least.
One thing is absolutely certain, PACT clearly needs to go back to HMRC, talk to someone who actually speaks with the authority of the Treasury and get the real facts. Until then, the official guidelines are what counts – and they are very clear that furloughing is appropriate for almost all freelancers.
PACT has some cleaning up to do it seems.