1. What’s new
On 2 April 2020, we blogged extensive details of the Coronavirus Job Retention Scheme in the blog “How to Furlough your employees or a director to obtain a grant under the Coronavirus Job Retention Scheme”. All the information in this blog remains valid.
This new blog addresses the practical implications of making claims, when the HMRC claim system is made live on 20 April 2020.
There were some minor changes announced on 15 April:
- you can claim for employees that were employed as of 19 March 2020 (the day the scheme was announced) as long as the RTI submission was on, or before, that date.
- employees who were made redundant or stopped working for you after 28.2.2020, can also qualify for the scheme if you re-employ them and put them on furlough.
- We are not sure if new payroll RTI submissions submitted after 19 March will be eligible for the grant. We expect to know whether they are eligible after the system is put live.
The claims system has capacity for 450,000 concurrent users. We expect that on 20 April there is likely to be more demand than capacity.
2. Who makes the claim?
The claim can be made by the owner of a business or by an accountant/payroll provider provided they have full access to payroll services on the Government Gateway platform.
For example, at TBLA, we have full access to the Government Gateway platform service and are managing the claims for clients. Please be aware that this is a significant workload which we are providing at no additional charge to our clients.
If you wish to make your own claim, you must have a Government Gateway account and to have PAYE Services on this Government Gateway account. This service can be applied for online. Your application for the service is not instant. It has to be made live via the receipt of an authentication pin code which HMRC sends by post within one to three weeks after applying. It will not be possible to make the claim without a Government Gateway account and PAYE services.
At TBLA we have access to the Government Gateway account and PAYE services, via agency for most of the payrolls that we do. (We are in contact with any clients who have yet to forward the authentication pin to us).
3. How is the claim made?
The only way to make a claim is online. Apparently, the service should be simple to use and any support you need available on GOV.UK. This will include help with calculating the amount that can be claimed (which includes 80% of the February salary for most employees plus associated national insurance and auto-enrolment pension costs).
Claims will be paid within six working days; you should not contact HMRC unless it is absolutely necessary – any queries should be directed to your agent/representative (e.g. your accountant) or the HMRC payroll webchat service.
HMRC will not answer any queries from employees – they will need to raise these with their employer.
4. Information required
- Payroll reference numbers
- Employer’s name
- Contact name
- Contact telephone number
- Bank account (account name, sort code and account – for receipt of grant).
At TBLA, we have this information for most clients. If we do not have bank details, we will contact the clients to obtain this.
Employers will need the following details of employees of directors who are furloughed:
- Employee number (if applicable)
- National Insurance number
- Claim period
- Claim amount
At TBLA we have this information for employees.
- THE GRANT CANNOT EXCEED THE AMOUNT THAT IS BEING DECLARED ON PAYROLL TO AN EMPLOYEE OR DIRECTOR FOR THE PERIOD BEING CLAIMED.
- THE GRANT CANNOT BE CLAIMED UNTIL THE EMPLOYEE OR DIRECTOR IS FURLOUGHED.
Employees must have been sent a furloughing letter.
Directors must be furloughed by the shareholders passing a resolution.
5. What will be paid in the monthly payroll as salary (money out)
The employer must decide on the monthly payments to their employees. Claims can be made 14 days prior to payment to employees. We don’t believe that there is a deadline for claims to be made.
At TBLA, we are ONLY processing claims for periods where the owner of the organisation has confirmed the payroll amounts. For example, a claim for furloughing grant for April will not be made until the April payroll has been confirmed ready for submission to HMRC through the normal RTI system.
The options for employee payment are as follows:
- Regular monthly salary or 80% of this amount (by agreement with the employee).
- Average monthly earnings from the 2019/20 tax year (applies to zero hours seasonal workers) or 80% of this amount (by agreement with the employee).
- In exceptional cases, the salary from the same month a year ago can be paid (applies to zero hours seasonal workers) or 80% of this amount (by agreement with the employee).
- Another amount (note that the grant cannot exceed this).
6. What will be claimed for the furloughing grant (money in)
The claim will be based on the information gathered from the process above (see 4. and 5.).
The furloughing letter sent to employees or members resolution to furlough directors includes:
- furloughing commencement date
- Details of salary
- Names of individuals to be furloughed.
- The payments included in the March, April and May payrolls.
At TBLA, we are only processing claims on receipt of the above information.
7. Formal actions required to furlough
The following are the formal documents that need to be actioned to furlough an employee or a Director. For employees, a formal meeting must take place (ideally face to face on a video call) followed by an official letter explaining the furloughing arrangements. For Directors an Ordinary Resolution has to be passed by the Shareholders or the company.
Draft formats for employee letters and a draft Ordinary Resolution are available here.
Peter Ellington is the Founder of Triple Bottom Line Accounting. He has a Doctorate in Education and campaigns for social and environmental justice.