Furlough, latest guidance
- Thread starter Newchodge
- Start date
- Original Poster
- #323
Work through the examples here https://www.gov.uk/guidance/work-ou...-through-the-coronavirus-job-retention-scheme
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Thanks for your helpful replys Cyndy.
1) You mentioned "Filing accounts is allowed" does it include submitting RTI returns? Or does it count as services?
2) Is claiming a grant also not allowed by furloughed directors since grant classifies as income?
3) I am thinking about following your advice about taking 3 weeks of furlough than 1 day of work and than another 3 weeks of furlough and so on so I could run payroll and make salary payments in that day, am I allowed to do this? (furlough myself again after 1 day of work) to avoid getting into trap with directors not allowed to work when furloughed.
Can you claim grant for the whole month period if this 1 day of work will be in the middle of the month, say I am furloughed from 1 April - 22nd April, than work on 23rd than furloughed again from 24th for another 3 weeks.
In this case am I allowed to claim grant for whole April period considering calculation of the grant will be for 29 days (1 was working so not claiming for it)?
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- Original Poster
- #325
1. I think submitting an RTI return may possibly be OK, but there is more to running payroll than submitting an RTI return - you have to provide a service for the employer by calculating amounts, generating payslips, paying employees and generate the return.
2. Claiming a grant is income generation
3, It is perfectly possible to furlough 3 (or more ) weeks, then work 1 day, then refurlough.
4. The claim is based on your payroll period. So if you run payroll for 30 April payment you can claim for all of April as soon as you know the figues (on 23 April in your example).
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HI
Reading the document that was kindly posted
'
This paragraph applies where-
(a) in the period beginning on 1 March 2020 and ending on the third day after the making this direction an amount by way of wages or salary is paid in respect of a period of employment (“the original payment”) to an employee,
(b) the original payment is less than the amount required by paragraph 7.1(b)(ii) for the purpose of claiming CJRS,
(c) before making a CJRS claim in respect of the original payment the employer pays the employee a further amount (“the further amount”) in respect of the period of employment to which the original payment relates, and
(d) the sum of the original payment and the further amount meets the requirements of paragraph 7.1(b)(ii).'
We paid everyone who was furloughed 80% for the 3 weeks March 23rd until April 10th .
We haven't paid the furlough people this week as there is not enough uncommitted money in the coffers . We will pay it immediately once the money for the previous 3 weeks arrives.
Will that be ok ?
Thanks
Reading the document that was kindly posted
'
This paragraph applies where-
(a) in the period beginning on 1 March 2020 and ending on the third day after the making this direction an amount by way of wages or salary is paid in respect of a period of employment (“the original payment”) to an employee,
(b) the original payment is less than the amount required by paragraph 7.1(b)(ii) for the purpose of claiming CJRS,
(c) before making a CJRS claim in respect of the original payment the employer pays the employee a further amount (“the further amount”) in respect of the period of employment to which the original payment relates, and
(d) the sum of the original payment and the further amount meets the requirements of paragraph 7.1(b)(ii).'
We paid everyone who was furloughed 80% for the 3 weeks March 23rd until April 10th .
We haven't paid the furlough people this week as there is not enough uncommitted money in the coffers . We will pay it immediately once the money for the previous 3 weeks arrives.
Will that be ok ?
Thanks
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Does anyone know if one of my employees was in paid annual leave from 1st of March can I claim grant for him from 1st of March if I furloughed him from 1st of March? Since he was on annual paid leave he wasn't doing any work anyway and as far as I know it is allowed for employees to be furloughed and be on annual leave (holiday) at the same time? So am I allowed to claim for him from 1st of March for March pay period?
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Please read the Chancellors direction to HMRC of 15th April under sect 71 & 76 of the CoronaVirus Act 2020, made on the 15th April... that's the legal framework for the CJRS scheme...
As a furloughed Director, the Chancellors direction (para 6.6) allows you to do any work necessary to supply information. As long as it's also to fulfill a duty or obligation which is related to the administration of your company.
HMRC must disregard such work for the purposes of paying a claim under CJRS to a furloughed Director.
There are zero rules about prohibiting income generation in the legal frame work for CJRS, it just doesn't come into it, and quite rightly too. But neither are there any exemptions for Directors to do work to supply goods or services, or exemptions for reasons other than duty or obligation, or exemptions for anything other the business of running your company.
What work furloughed Directors can do in their own companies, has been been pretty well ring fenced by the three requirements of information, obligation and administration.
There is no work you have asked about above, which you can't legally do as a Director whilst furloughed.
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para 6.6: 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)
para 6.1 An employee is a furloughed employee if- (a) the employee has been instructed by the employer to cease all work in relation to their employment.
Marcus how did you come to a conclusion that "provision of other information relating to the administration of the director’s company" equals to claiming the grant and receiving it while the grant is classified as income? Wouldn't it be income generating work?
This is still too shady legal jargon here which can be interpret differently.
I wish there were more accredited lawyers views on that but I suppose Cyndy is a lawyer right? And she says it is risky to be furloughed for a whole pay period and at the same time claim a grant (income as per HMRC). Seems to me it is much safer to step out of furlough for 1 day to claim the grant than don't and be sorry about it down the road.
I am lost here. Why, just why can't HMRC or government give a direct clarification on such an important topic for owner managed small company's directors?
para 6.1 An employee is a furloughed employee if- (a) the employee has been instructed by the employer to cease all work in relation to their employment.
Marcus how did you come to a conclusion that "provision of other information relating to the administration of the director’s company" equals to claiming the grant and receiving it while the grant is classified as income? Wouldn't it be income generating work?
This is still too shady legal jargon here which can be interpret differently.
I wish there were more accredited lawyers views on that but I suppose Cyndy is a lawyer right? And she says it is risky to be furloughed for a whole pay period and at the same time claim a grant (income as per HMRC). Seems to me it is much safer to step out of furlough for 1 day to claim the grant than don't and be sorry about it down the road.
I am lost here. Why, just why can't HMRC or government give a direct clarification on such an important topic for owner managed small company's directors?
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Cyndy thanks for reply first of all.
What do you think about this part from HMRC guidance:
"Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company."
Specifically - "i.e. they should not do work of a kind they would carry out in NORMAL circumstances to generate commercial revenue "
Claiming a grant and receiving it is an income however it is not work carried out in NORMAL circumstances, since furloughing and COVID-19 situation is definitely not NORMAL circumstances and in normal circumstances there is no such thing as a CJRS grant.
Doesn't it mean that claiming of the grant is allowed work for furloughed directors?
Now regarding the Payroll service, don't you think this can be interpret under the Chancellor's directions as "company accounts or provision of other information relating to the administration of the director’s company". Even thought it is services according to this direction it can be disregarded.
To conclude I just found a youtube video of Jon Davies from Jon Davies Accountants discussing this specific topic and he says he thinks that running payrol, filling accounts, vat returns, paying suppliers and filling CJRS claim can be made by furloughed sole directors. He is charted accountant with many years of experience so I just don't know it seems like a lot of accountants think directors can do the mentioned above.
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- Original Poster
- #332
Lots of accountants have advised directors they absolutely cannot be furloughed, because of the need to carry out those duties. I had a lengthy discussion eith one of them on this thread because I have always maintained that directors CAN be furloughed. It starts around post 55/59 if you are interested.
Until the matter is tested by the tribunal or court, everyone's view is only opinion. I have heard expewrienced barristers, including one very emminent employment barrister claim directors cannot be furloughed, although that was before the version of guidance came out that stted that they could.
As marcus points out the Direction is the closest we have to law on this, but that directly contradicts guidance in several areas.
However it must be read in its entirety. The starting point is that a fruloughed employee cannot do any work for the employer or any organisation associated. That applies to employed directors. The later paragraph states that specific work by a director must be disregarded. The only argument is what must be disregarded. That is defined as
"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)"
Running payroll is not, however marcus tries to twist it, either filing company accounts or providing information. Neither is paying a supplier or claiming a grant. I don't understand why that simple fact is so hard to grasp.
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- Original Poster
- #334
You can furlough them from the point that you tell them that they are furloughed and must do no work for the company. I doubt you did that before they went on holiday? If the rest of the workforce was told on 1 March you are probably OK. If the rest of the workforce was furloughed later, the answer should be obvious.
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because they want it both ways!
My personal view is that the primary purpose of the legislation was to save employees jobs during the lock down period so that they could jump back in again when the economy was unlocked.
I can't envisage a situation where HMRC will come down heavy on owner managed businesses that engage in a bit of extra administration duties during furlough so that the company is on a firm footing ready to start trading again. After all the self employed are still allowed to continue working whilst claiming grant support.
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The written law is extremely clear, and the written law is the only thing that counts. 'Income generation' is not used in any way to frame the exemption to Directors work at all, so please ignore it. The government ring fenced what you could do far more clearly. We're also not very interested in HMRC guidance, particularly when it's exactly the same guidance that existed prior to the law being published. Law trumps Guidance... every single time.
If you're a Director, you can furlough yourself, and you can still do any work required to administrate your company, as long as the work being undertaken is to fulfill some duty or obligation which requires the supply of information.
It's in black and white... what more do you want? Get on and do the work required to administrate your company... to do the things you *need* to do to administrate your company... the government has directed HMRC to disregard any work you do to achieve this.
The law requires you to pay employees, provide them with payslips, record payments accurately, provide accounts at the end of the year, pay your taxes, make payments to suppliers for contracts you have entered into... you can do any work you need to do, to achieve these sorts of things. To exaggerate an unlikely example... but if you really had to, it wouldn't matter if you had to drive 500 miles to deliver a completed form somewhere... if that's the work that was absolutely required to fulfill an obligation... the work involved to fulfill the obligation (driving 500 miles) must be disregarded by HMRC.
There is nobody of any consequence who thinks you can't do these things, since the legal framework for the CJRS scheme was finally published on the 15th April. It is clear as a bell, HMRC must disregard such work.
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Oh dear... your comments are completely ridiculous. The Chancellors Direction to HMRC is indeed the law, it is made by the powers granted to the Chancellor under 71 & 76 of the CoronaVirus Act 2020.
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The directive wasn't sent to businesses it was sent to HMRC it isn't law, if HMRC want anything clarifying they will just ask.
They've put out numerous information since receiving the directive, the last piece a video that says the director can't provide any service to the company
go to about 8 minutes 25
They've put out numerous information since receiving the directive, the last piece a video that says the director can't provide any service to the company
go to about 8 minutes 25
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The law (para 6.6) doesn't state what exemptions a director does not have, to work when furloughed. It states what exemptions a director does have to work. It's very clear and concise.
The HMRC guidance you mention regarding directors 'services' mentioned in the video, concerns directors providing things like paid management or consulting services to their company etc.. It has NOTHING to do with working in your own company to fulfill normal administration duties, like the work which is necessary to pay your employees wages (including yours), paying suppliers invoices, or paying government taxes.
Please stop repeating this nonsense...
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