Much noise was made yesterday about the latest changes to the Coronavirus Job Retention Scheme (CJRS). It’s definitely an improvement, but it still leaves many who changed jobs after 28 February in the void.
There’s been a little more about the portal for filing claims, as well as the claims process.
Additionally, the government has provided more details in terms of certain specific situations, which are set out in bullet points at the end of this article.
Qualifying date extended
First of all, the qualifying date for staff who may be furloughed has been extended from 28 February to 19 March. This means new staff who joined you may be eligible if – and it’s a BIG IF – the following two criteria are met:
- Employees must have been on your PAYE payroll on or before 19 March; AND
- You must have made an RTI (Real Time Information, the name of the PAYE reporting mechanism) submission notifying payment to HMRC on or before 19 March.
That’s all well and good if you run a weekly or mid-month payroll. What about the vast majority of SME businesses whose payroll only runs at the end of the month? Let’s say you took on a new employee on 1 March and included them in your normal month-end payroll. Unless you ran that payroll and notified HMRC of the payment on or before 19 March, your new employee still misses out. Many employers run payroll and file RTI on or immediately prior to the last day of the month. Not on or before the 19th. Any notifications under RTI from 20 March onward DO NOT COUNT. This is still not enough, as most people who switched jobs on 1 March still miss out.
How to make a claim
HMRC have indicated that the portal should be available by 20 April. That will be a huge achievement if they can hit that date, and an even bigger achievement if the portal doesn’t fall over due to the sheer volume of businesses applying. I wait with bated breath.
For SME businesses it looks like the claims process is going to be manual. The guidance says that if you have fewer than 100 furloughed staff you’ll need to enter the details directly onto the system. If more than 100 staff, HMRC ask to have the data submitted in an Excel or .csv spreadsheet. They want a lot of data. First up, for the employer:
- PAYE reference number
- Unique Tax Reference number
- Claim period – start and end dates
- Amount claimed
- Bank account number and sort code (must be a UK bank account)
- Contact name and phone number
Plus, for each employee you’ll need to enter their name and NI number in the portal.
It looks like the most common SME accounting systems (Xero, Quickbooks and Sage) are developing the necessary code to automate this filing. If you process payroll in-house you should check with your bookkeeper or finance manager. If you outsource payroll then check with your service provider.
HMRC will then review your claim for eligibility, and approved claims will be paid by BACS to your bank account. At present there is no indication as to how long it will take until the claims have been reviewed and paid. For cash flow planning, you should ensure you have enough money in the bank to meet payroll in the event of a delay in receiving the furlough grant from HMRC.
You must ensure that the amount of grant you receive from HMRC is paid to your staff. You cannot deduct any charges for administration, handling or anything else.
Finally, and this isn’t new, HMRC have the right to retrospectively audit all aspects of any claim for furloughed staff. Be sure to keep detailed records. This includes written communication with employees confirming that they have been furloughed. These records must be kept for five years.
Some of the finer details
Just to reiterate, and this is not new, when your employees are on furlough you cannot ask them to do any work that either makes money for or provides services to your organisation. There are exceptions to this for directors who must fulfil their statutory duties. Please refer to my previous article “CJRS Update – clarity for company directors” published on 5 April for more details.
There is a lot more detail in the latest communication from HMRC. Some of it gets very specific, and I’ve distilled the key bits here with a view to maintaining my commitment to explain this stuff in plain English. If you have any specific queries, please ask in a comment or send me a direct message.
- Staff working reduced hours are not eligible for this scheme. Only staff who are put on furlough and who do not carry out any work are eligible.
- Staff on unpaid leave are eligible if the unpaid leave started after 28 February. For unpaid leave starting on or before 28 February, you can only furlough staff when the agreed leave period ends.
- Staff on sick leave or self-isolating are eligible for Statutory Sick Pay. CJRS is not a scheme designed for short-term sick leave. However, staff who are sick or self-isolating may be furloughed subject to the minimum 3-week furlough period.
- Staff who are shielding vulnerable people or who have caring responsibilities can be furloughed.
- Staff on fixed term contracts can be furloughed, and the contracts can be extended during the furlough period. Once the term ends you cannot claim.
Conclusion
As the title says, it’s a step in the right direction. I will keep pushing the government for more to help SME business owners through this unique time.
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