What can furloughed directors do?

[manwithnonames]

We submitted RTI via HMRC's PAYE tool for March exactly the same as normal.
It included no updates, additional questions or notices so presuming we will have to declare furloughed employees on the magical mystical portal on the 20th.

HMRC will use the "registered before the 28th on RTI" as the visible counter fraud measure whereas any additional risk is mitigated by perceived risk of comeback..

 

[DavidWH]

No but HMRC will know who's furloughed through the applications portal they're setting up, and who's earning what and from who's payroll through PAYE RTI.

If you employ 4 staff, and furlough them all, yet your VAT return shows no noticeable downturn in trade, alarm bells should ring... assuming they all talk to each other?

 

[Newchodge]

No but HMRC will know who's furloughed through the applications portal they're setting up, and who's earning what and from who's payroll through PAYE RTI.

If you employ 4 staff, and furlough them all, yet your VAT return shows no noticeable downturn in trade, alarm bells should ring... assuming they all talk to each other?

I expect they will, eventually.

 

[James Kaye]

Are you considering furlough for the director(s) while the staff are not on furlough? That's unusual!

Haha no. There are two directors so we could feasibly do 3 weeks on 3 weeks off each for continuous coverage of staff and running things. It's perfectly legal and feasible as I agree, one Director cannot leave a business to run itself!

 

[SillyBill]

OP you said you were ofc planning for your return, does that mean working on stuff? Planning to my mind is work.

We briefly had a look at furloughing a director (possibly me or my business partner) but decided against it. It all looked very dodgy ground unless you could do absolutely nothing...few have that luxury. In our case, at any given time we have a mountain of stuff which needs doing that but is easily overlooked (admin, tidying things up/organising, writing procedures, finding process efficiencies etc.). We've decided to just crack on with that stuff and that is very much working in my view. May not generate income off the bat but it will be a benefit to our business on the other side. Also I would consider any e-mail response, let alone a quotation out, as working for the business. If furloughed IMO a director should have an out-of-office on to say you cannot work for the company until X date and to contact back again.

 

[DavidWH]

@SillyBill that's the thing, it depends who you speak to, as there is no definitive advice, and all open to interpretation.

Advice is Directors can furlough, even sole directors I suppose.

You can rotate furlough between directors, or furlough for 21days, work the 22nd day doing what is required, restart furlough again for a further 21 days.

Or the government could clarify exactly what directors are permitted to do.

If your a sole director/employee of a company that's a camera operator, your main 'work' is operating a camera. If theres no fimling happening, there's no work as camera operator. Why shouldn't they furlough? What's the harm in making a payment to a supplier?

 

[Newchodge]

The latest furlough guidance is out and, more importantly the Treasury Directive to HMRC to implement the job retention scheme. The second document sets out the rules as opposed to the guidance which is all we had up to now.

The directive states, with regard to directors:

Work undertaken by a director of a company to fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company must be disregarded for the purposes of paragraph 6.1(a).

So the only work a furloughed director can undertake is obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company.

Chasing invoices, paying suppliers, marketing, reading emails count as work.

 

[DavidWH]

Look's like I'll be doing 21 days furloughed, 1 day paying everyone, then back on Furlough

Suppliers will just have to wait for their money

Do you have a link for where that info is provided so I can send it on to some who are advising otherwise?

 

[Newchodge]

It isn't in the normal gov.uk series. try this https://assets.publishing.service.g...4/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

 

[DavidWH]

Thank you, it's there in black and white. It's the internet and I like to fact check.

'provision of other information relating to administration of the company' still open to interpretation, and thus abuse. A yes/no of what is acceptable and isn't would be a black and white guidance for enforcement if, and when they audit claims.

 

[Newchodge]

Thank you, it's there in black and white. It's the internet and I like to fact check.

'provision of other information relating to administration of the company' still open to interpretation, and thus abuse. A yes/no of what is acceptable and isn't would be a black and white guidance for enforcement if, and when they audit claims.

That is still a very clearly limited phrase - provision of information relating to administration is not communicating with clients and suppliers.

 

[DavidWH]

Is paying them communicating? It could be classed as administration by some.

If this was challenged in court, it's all down to the opinion of the judge on the day, and the arguments put forward.

There's a definitive yes/no for employees, even self employed it's clear cut, but for directors, it's all a little fluffy.

I've sent the link to get it clarified by someone who advised us differently, and I'm sure we'll get a different opinion... that's the trouble with opinions, they're like bum holes, everybody has one.

 

[Ridsharc]

I'm with Mark T Jones on this one.
"Who's deciding, who's checking - we're all making it up as we go!"
I often appreciate the opinion/interpretation of the sticklers on here, but this is taking it all a bit too seriously.

 

[DavidWH]

@Ridsharc I agree with you, but I'm sure someone will be checking at some point.

This is where the problem is, make it up, interpret it as you wish, but if, and when someone comes knocking you're on your own. They may agree, they may not. they may see it as survival or as deliberate fraud.

 

[Newchodge]

I don't believe it is ethical to advise someone to commit fraud on the basis that it may not come out. I am not suggesting that anyone here is doing so, just making a statement of my own belief.

 

[DavidWH]

@Newchodge I'm with you, I am by no means intentionally trying to defraud anyone. My point has always been that there is no definitive yes/no guidance, like there is for Self Employed, or genera employees.

We've zero orders, zero income, and we're not actively generating income. We are shutdown.

We've still suppliers who need paying, they will be relying on our payments, as others will be using corona to delay payments, and similarly will have wages and bills to pay themselves.

 

[thetiger2015]

@Newchodge
We've zero orders, zero income, and we're not actively generating income. We are shutdown.

We've still suppliers who need paying, they will be relying on our payments, as others will be using corona to delay payments, and similarly will have wages and bills to pay themselves.

I don't think you can furlough yourself if there's still work to do, beyond the legal obligations - I'd take those to be VAT/Company accounts related and payroll.

'...others will be using corona to delay payments...' <<<< if they're doing it, then maybe you should also be delaying payments? I understand it's not the right thing to do, I wouldn't want to hold money from a supplier but if others are doing it and you've got no income...

The complexities of running a business appear to be lost on those in charge. They don't understand that you cannot simply close the doors and wait 3 months. Direct debits are still leaving accounts, deferred payments will need paying at some point.

I wonder if you're far away from re-opening though? Maybe a few weeks before the doors are open again?

 

[Gordon - Commercial Finance]

they're doing it, then maybe you should also be delaying payments? I understand it's not the right thing to do, I wouldn't want to hold money from a supplier but if others are doing it and you've got no income...

“everyone else is doing it” is the worst reason to do anything.

 

[thetiger2015]

“everyone else is doing it” is the worst reason to do anything.

That literally makes zero business sense.

If you have no income, you need to reduce costs. If your competitors are lengthening the time it takes them to pay invoices, they'll survive. If you're the one who's constantly paying all invoices, when competitors are not, you'll run out of money first.

The wording >> "We've still suppliers who need paying, they will be relying on our payments, as others will be using corona to delay payments" <<< competitors are using this to their advantage to retain cash in their business. If they're doing it, why would you not explore the option of lengthening the payment terms? The supplier being reliant on payments doesn't really impact the OP, they've got no money coming in either, so everyone in the chain is in the same boat and if you're the one bailing people out, you'll run out of money long before the competitors do.

 

[Gordon - Commercial Finance]

That literally makes zero business sense.

If you have no income, you need to reduce costs. If your competitors are lengthening the time it takes them to pay invoices, they'll survive. If you're the one who's constantly paying all invoices, when competitors are not, you'll run out of money first.

The wording >> "We've still suppliers who need paying, they will be relying on our payments, as others will be using corona to delay payments" <<< competitors are using this to their advantage to retain cash in their business. If they're doing it, why would you not explore the option of lengthening the payment terms? The supplier being reliant on payments doesn't really impact the OP, they've got no money coming in either, so everyone in the chain is in the same boat and if you're the one bailing people out, you'll run out of money long before the competitors do.

If I had the cash to pay what I owed, then absolutely I would pay what I owe.

If you can’t see any business sense in wanting your suppliers to still exist when all this is over, then I don’t know what to tell you.

Even if you disregard “business sense” - what about moral obligation? Humanity?

 

[DavidWH]

With our grant imminently due in our account, we'll be best positioned to pay all our suppliers, and the remaining cash will hopefully tide us over until the doors can reopen, assuming we're furloughed.

We're fortunate that some of bigger customers paid us before they went working remotely, which helped enormously. I'm with @Gordon - Commercial Finance, how is the company benefiting by paying debts due?

 

[Alan]

fyi incase you haven't had the email

We are also updating you on an important change to the scheme relating to employee eligibility:

• you can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying us of payment of that employee on or before 19 March 2020
• employees that were employed as of 28 February 2020 and on payroll (i.e. notified to us on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.

More information on this can be found on GOV.UK.

 

[Alan]

I'm not furloughing myself as I have work to do, but I know one director of another company that is doing 3 weeks furloughed 1 week working ( to maintain client confidence that the business will be back mainly )

 

[SillyBill]

If I had the cash to pay what I owed, then absolutely I would pay what I owe.

If you can’t see any business sense in wanting your suppliers to still exist when all this is over, then I don’t know what to tell you.

Even if you disregard “business sense” - what about moral obligation? Humanity?

Agree with this. A lot of businesses may find that they need to find new partnerships/suppliers when this is over or have their previously favourable terms revised sharply. I am very much noting those that are withholding payment, there is a cost to lost "goodwill". One of the reasons our business enjoys attractive pricing and good terms with our suppliers is that we are sticklers for paying on time and in full. And have been for decades. Suppliers like the fact they have guaranteed cash flow each month without fail. Our payment performance often gets mentioned to me so people really do value it.

I am furious with one customer in particular where I know for a fact they are paid by their customer by proforma and they have 30 day terms with me. It is not much better than stealing from me. The goods have been delivered, you've earned a lot of money for them upfront and won't pay me? They are on proforma after this. Or they can F off and find someone else to supply them, good riddance...

 

[Ian J]

We've zero orders, zero income, and we're not actively generating income. We are shutdown.

It's only a small point but you are still advertising in your signature

 

[DavidWH]

Brings in £1000's that does

Our websites also still online too, best turn those off too?

 

[Interestedobserver]

@Ridsharc I agree with you, but I'm sure someone will be checking at some point.

This is where the problem is, make it up, interpret it as you wish, but if, and when someone comes knocking you're on your own. They may agree, they may not. they may see it as survival or as deliberate fraud.

That isn't fraud. It doesn't mean you wouldn't have to pay it back. It's just opinion on whats allowed and what isn't.

IMO

 

[Ian J]

Brings in £1000's that does

Our websites also still online too, best turn those off too?

Who knows. The chap that looks after the website has been furloughed or else the company handling your digital marketing aren't responding

 

[Gordon - Commercial Finance]

It's only a small point but you are still advertising in your signature

For the thousands of people who claim Furlough, somehow I can’t see HMRC checking in to that level of detail somehow...

 

[Mark T Jones]

For the thousands of people who claim Furlough, somehow I can’t see HMRC checking in to that level of detail somehow...

They could take all the excess NHS volunteers and put them to work looking for technical infringements of various grants.

That would be a huge vote grabber

 

[DavidWH]

Votes = Politics = bollox.

HMRC are the smart bunch who introduced MTD, yet when their inspectors arrive, still expect stacks of paper, and folder to trawl through, and when your accountant points at an isolated computer, containing a backup of all the information they need... "Oh I can't touch that"

I'm not saying they won't check, they're welcome to check, but come one they're not the thought police!

 

[marcus_bond]

It looks deliberately unclear... I'm the only employed director in the business (and take a proper salary out of the business), and have just been added to the shielding list... sort of knew I would be... so I have already been self-isolating for 4 weeks, indeed I haven't been out of the house for 4 weeks. Which sucks.

The only thing I've had to do so far, is sign the March cheques for suppliers (which my employees brought up to my house), tie up the end of year PAYE, start the new PAYE year, operate the April payroll, arrange Aprils HMRC payment, arrange NEST's pension payment, send a PDF of the wageslips to work for printing and issuing. I've also had to certify a new, extended validation SSL certificate for our web site, as it runs out at the end of the month, and filed a complaint with google shopping which had incorrectly disapproved a lot of our products.

My staff ring me at home, but I can hardly stop that, they are not only employees, but friends, and have been bringing me some essentials, like bread and Milk when I've run out. (Getting a home delivery slot has been murder). And of course they've chatted to me about work.

(Our accountant is now isolating too... so producing payments to suppliers is going to prove interesting later this month).

Apart from that... I've spent much of my time in the back garden, exercising, and chatting on the phone to friends and family, and bought a new amplifier and speakers, and signed up to tidal, and been watching a bit of the new Disney+ channel. Obviously I've been thinking about the business too, and trying to stay abreast of the government policies, not just for the business, but as they concern me too... I'm a shareholder and employee of the company after all.

But truly, I can't say I've done anything like working for the company for the last 4 weeks... can I be furloughed, who knows...

 

[Gordon - Commercial Finance]

@DavidWH loving your work with the new signature and image.

 

[Newchodge]

It looks deliberately unclear... I'm the only employed director in the business (and take a proper salary out of the business), and have just been added to the shielding list... sort of knew I would be... so I have already been self-isolating for 4 weeks, indeed I haven't been out of the house for 4 weeks. Which sucks.

The only thing I've had to do so far, is sign the March cheques for suppliers (which my employees brought up to my house), tie up the end of year PAYE, start the new PAYE year, operate the April payroll, arrange Aprils HMRC payment, arrange NEST's pension payment, send a PDF of the wageslips to work for printing and issuing. I've also had to certify a new, extended validation SSL certificate for our web site, as it runs out at the end of the month, and filed a complaint with google shopping which had incorrectly disapproved a lot of our products.

My staff ring me at home, but I can hardly stop that, they are not only employees, but friends, and have been bringing me some essentials, like bread and Milk when I've run out. (Getting a home delivery slot has been murder). And of course they've chatted to me about work.

(Our accountant is now isolating too... so producing payments to suppliers is going to prove interesting later this month).

Apart from that... I've spent much of my time in the back garden, exercising, and chatting on the phone to friends and family, and bought a new amplifier and speakers, and signed up to tidal, and been watching a bit of the new Disney+ channel. Obviously I've been thinking about the business too, and trying to stay abreast of the government policies, not just for the business, but as they concern me too... I'm a shareholder and employee of the company after all.

But truly, I can't say I've done anything like working for the company for the last 4 weeks... can I be furloughed, who knows...

No. You have been working for the employer. If you do none of those things then you could be.

 

[marcus_bond]

No. You have been working for the employer.

The question is though... can I furlough myself...? excepting the Google Shopping thing which is obviously about revenue earning... everything else seems to be covered under acts of parliament... i.e. if I don't do these things, and there is nobody else to do them, I would be breaking the law in some way by not doing them.

 

[Ryan100000]

We're at the point now where it makes sense to furlough myself, alongside my dad, and fellow director who is currently furloughed.

I understand we cannot work, which is fine theres little work to do.

I'll still be paying suppliers, and chasing overdue accounts, clearly in the best interest of the company to do so.

Our accountant has suggested we can still 'work' provided the tasks we do, do not result in an invoice or income. So no design or production.

I assume we could still estimate any enquiries, keep replying to emails and calls, and generally keep the business running with zero income.

Or is it a case of sit on our hands, and do nothing. Of course we're planning for our return in the background.

The IoD sate several of these things as the duty of directors so I'd assume most are safe. I'm curious if you'd be allowed to generate income that has no human interaction from your company.

 

[Ryan100000]

A straight forward employee can just stop working. Directors have different responsibilities.

Sought advice from various people yesterday with mixed advice, face it any comeback saying "I got told online it was fine" wont cut it.
I'll trust the advice of the advisors who have PI insurance in this instance... there is no definite answer from gov.

@Newchodge Martin Lewis made a valid point, that we could trade as a sole trader whilst furloughed, not using any company assets... perfectly legally.

How about this... you have to furlough for a min 3 weeks. Furlough for 3 weeks, on the 22nd day make the payments required, then furlough again for a further 21 days.

Can you come on and off furlough during the now 4 month period?

 

[valakot]

I don't think you can furlough yourself if there's still work to do, beyond the legal obligations - I'd take those to be VAT/Company accounts related and payroll.

I am a director of the ltd and there are 2 people on the payroll - me and 1 other staff, I have furloughed both me and other person from 21 March since we had to shut down. I as a director has been doing a payroll for my company. Now my question is am I able to still run the payroll while being furloughed since this is not revenue generating obligations?

 

[Newchodge]

The IoD sate several of these things as the duty of directors so I'd assume most are safe. I'm curious if you'd be allowed to generate income that has no human interaction from your company.

The IoD has just put out an anguished statement that the Direction limits the things a director can do to the things I keep mentioning, and that this MuSt be changed. In other words, the IoD now realises its earlier advice was wrong.

 

[Newchodge]

I am a director of the ltd and there are 2 people on the payroll - me and 1 other staff, I have furloughed both me and other person from 21 March since we had to shut down. I as a director has been doing a payroll for my company. Now my question is am I able to still run the payroll while being furloughed since this is not revenue generating obligations?

No, you cannot it is providing a service to the employer.