25 March 2020    |    Taxation, Payroll

Job Retention Scheme

Details of the Job Retention Scheme and Business Interruption Loans, as updated on 13/4/20.

How to claim (added 13/4/20)

The Portal opens on Monday 20th, and we will submit claims for all clients who wish us to do so. 

Can we request that you refrain from phoning or emailing to chase the status of your own claim.  We will have no way to check the status, and dealing with this will simply slow down the submission of the remaining claims. 

Our team are going to be exceptionally busy dealing with this and the normal payroll for hundreds of clients.

*** Incoming phone calls cannot be transferred to the wages team, as everyone is working remotely. ***

The claim can be submitted by either the agent or the employer, as long as the agent has an authority in place.  As the employer, you still remain responsible for ensuring that the claim is correct.  Some claims will be audited by HMRC later in the year.  We will contact you if there is any problem with the authority we hold.

If we do not already hold them, we will need you to send us your business bank details by email, please.

The claim covers the period from when the employee actually ceased working, and not from when the decision to furlough was made.  The claim covers a period of at least three weeks, so if your staff were not furloughed until April your claim will be processed later in the week.

The guidance originally suggested that claims could be made in advance of the actual payment date.  At the present time it is not clear if that is still the case.  If it is, we may hold processing of monthly paid staff for a few days until such time as we can claim for April salaries too.

If staff were furloughed part way through the week, the claim will have to be calculated pro-rata, including a share of employers NI and Employers pensions.  We may need more information from you to complete the claim.

If you want to submit the claim yourself, then please do so, but we may not be able to provide you with any information you are missing as we will be prioritising dealing with claims, and with the normal payroll.

The published version of the information is at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme and covers the scheme in some detail.  HMRC will continue to issue further guidance using their new powers to explain precisely how the scheme will operate.

Coronavirus Job Retention Scheme

The Coronavirus Job Retention scheme provide for government grants which will cover 80% of the normal salary of PAYE employees who would otherwise have been laid off as a result of this crisis. The scheme is open to any employer and will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.

To claim under the scheme employers will need to:

HMRC is working to set up a system for reimbursement, as we understand that the existing systems are unable to make payments to employers.  Business that need short-term cash flow support, may benefit from the VAT deferral announced and may also be eligible to apply for a Coronavirus Business Interruption Loan via their own bank.

To update us with wages information, then email wages@nicolsonaccountancy.co.uk.  Don’t phone the wages in, as the wages team are not able to receive calls.

FAQs

Q: What does “furloughed” mean?

A: It is a nasty Americanism that seems to mean “being laid off”.  That is to say, you are not being paid beyond a minimal amount, but you have not lost your job either.

Q: Are the Government going to pay my employees for me?

A: No.  There seems to be a misconception that the government will subsidise 80% of your employee costs while they work for you. It is only for people who you would otherwise have made redundant in any other situation. They are in effect on “garden leave” with little pay, and should not be doing any work during the “furloughed” period.

Q: Can they do some part-time work for me while they are off?

A: Absolutely not.

Q: Can they go part time and benefit from this scheme?

A: No. They can’t do any work whilst “furloughed”.  Employers are best making some staff full time, and put others on garden leave.

Q: Who qualifies for this?

A: Anyone who was on your payroll at 29th February.

Q: What support I will get? (changed 27/3/20)

A: The current definition is that the employer will receive is 80% of the normal salary up to a maximum of £2,500 per month; with “normal” based on the February 2020 payroll.  The employer can claim for Employers NI and employers Auto Enrollment pension paid of up to 3%.

Alternatively the employer is also entitled to make the claim based on the higher of: –

But in both cases, this amount must be passed to the employee, so the employer is simply maximising the assistance available to the employee.

Q: What about tax, NI, pensions and all other deductions?

A:  These will continue to be computed and payable as normal. The employer must run the payroll as normal and wait for a grant based on the reported salary. There are currently no special arrangements for deferring these payments.

Q: Can we alter February’s payroll to increase my claim?

A: No. The payroll has been submitted and registered with HMRC and to do so would be tantamount to fraud.

Q: My spouse and my kids are on the payroll and have never lifted a finger for the business, can I claim for them even though they will continue to do nothing.

A: There are going to be some anti-avoidance provisions, to prevent fraud, so we would recommend against this unless they actually start working in your business.

Q: I’m a director.  Can I benefit from this? (updated 2/4/20)

A: Directors can be furloughed, but they are only allowed to work to complete their statutory obligations.  That basically will mean that you cannot do any ‘cash generating’ work for the business, but you can do all the bookkeeping paperwork and statutory returns.   We suspect that there will some form of restriction on the awards to shareholders to stamp out abuse.

One company director could certainly remain working whilst the others are furloughed, but if all the directors need to be furloughed then the business has a bigger problem.

Q: Can you do something fancy to allow me to claim under this scheme when even though you know I don’t really qualify?

A: No. It is wrong.  Plus, we will have so many clients to help through this scheme that we are not going to delay their Job Retention Grant claims whilst we tell you “no” ten times.

Q: But my mate has an accountant who said they would do that.

A: We are happy for you to transfer your business to that accountant.

 

Coronavirus Business Interruption Loan (updated 6/4/20)

These loans are available via your bank since 23 March 2020.   Until recently, the banks were charging high interest rates and demanding security from all borrowers in a way that we considered excessive and we could not recommend this to clients.

The security requirement has been waived and interest rates lowered on the instruction of the Chancellor.  We now consider that these may be worth considering, and you must approach your own bank first.

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The UK government has introduced an unprecedented combination of measures to support businesses. One of these is the Coronavirus Business Interruption Loan Scheme (CBILS), a temporary replacement of the existing Enterprise Finance Guarantee Scheme, which will give companies easier access to both mainstream funding as well as smaller specialist lenders. Lenders will not be able to request personal guarantees for loans under £250,000. Security for the banks will be provided by the government who will guarantee 80% of any losses suffered by the lender.

Key Points

What type of borrowing is available?

Is CBILS right for my business, and do I qualify?

If you want to consider this, then please contact your bank in the first instance.

 

For more information, please reread.

Please do not email the team individually, as updates will also be made available via social media.

Disclaimer

The information provided is for general information purposes only.

Legislation and details may have changed since this was written.  The text may not include all matters that are relevant to your individual situation.

You should not make decisions, or refrain from making decisions, without taking further professional advice about your specific circumstances.

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