What can furloughed directors do?

[Newchodge]

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.

You cannot furlough yourself, as if you were to do that you would be self employed and furlough does not apply. Your employer can furlough you following a properly constituted Board meeting, with the decision to furlough the Director recorded in the minutes.

 

[marcus_bond]

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?

Yes that's fine as far as I'm concerned, (although there is some questionable advice coming from people who don't seem to know what they are talking about on here). I'm doing the same, furloughing my employment part, and still doing the director part, due to the fact that PHE guidance has meant my GP has put me on the shielded list. Furloughing requires that those who are furloughed, continue to be paid, it's conditional on that. Also the law says...

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).​

As a company director, I have a duty to keep accurate company accounts, which means I can still do the necessary administration required to meet these legal duties and obligations, or related to meeting these duties and obligations. The administration of the payroll is an important part of keeping accounts...

 

[marcus_bond]

You cannot furlough yourself, as if you were to do that you would be self employed and furlough does not apply. Your employer can furlough you following a properly constituted Board meeting, with the decision to furlough the Director recorded in the minutes.

I'm disregarding your advice... because I don't think you understand what you're talking about...

 

[Ian J]

I'm disregarding your advice... because I don't think you understand what you're talking about...

I think that it's you clutching at straws so feel free to try and furlough yourself and continue to act as bookkeeper at the same time but please don't diss one of the few people on this forum that do know what they are talking about as far as employment law goes

 

[marcus_bond]

I think that it's you clutching at straws so feel free to try and furlough yourself and continue to act as bookkeeper at the same time but please don't diss one of the few people on this forum that do know what they are talking about as far as employment law goes

I think they are giving out incorrect advice... which needs pointing out...

 

[Newchodge]

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).

How, precisely, is running payroll either FILING company accounts or providing information relating to the administration of the company? Have a look at the IoD's paniced report yesterday when they realised that the direction issued on 15 April means that the advice they have been giving out is wrong.

 

[Newchodge]

@marcus_bond Perhaps you would like to argue with this lot?

https://www.iod.com/news-campaigns/...bpM8dmwxpvL-lWIx3OXkx3gXhdUn_JfauxZHnowOwaHeU

 

[marcus_bond]

How, precisely, is running payroll either FILING company accounts or providing information relating to the administration of the company? Have a look at the IoD's paniced report yesterday when they realised that the direction issued on 15 April means that the advice they have been giving out is wrong.

I'm totally disinterested in IoD... I'm interested in the written LAW...

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,
(b) the period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and
(c) the instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease.​

But...

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).
​

Administration = "the process or activity of running a business, organization"

This is not up for discussion by HMRC... This type of legal, obligatory, duties 'work'... MUST BE DISREGARDED as regards the instruction to cease all work in 6.1a

You can't not pay employees who have a contract to be paid (including yourself) without giving them 3 months notice, it's illegal... and a condition of furloughing, is that the government will pay, only if the employer continues to pay wages... if you're in a tiny business, and the only director, and it's only you who can run the payroll... then yes, of course you're going to have to do that work... and HMRC *must* disregard it.

Typing information into some payroll software, and into some banking app, is providing information... that's the definition...​

 

[Newchodge]

I'm totally disinterested in IoD... I'm interested in the written LAW...

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,
(b) the period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and
(c) the instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease.​

But...

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).
​

Administration = "the process or activity of running a business, organization"

This is not up for discussion by HMRC... This type of legal, obligatory, duties 'work'... MUST BE DISREGARDED as regards the instruction to cease all work in 6.1a

You can't not pay employees who have a contract to be paid (including yourself) without giving them 3 months notice, it's illegal... and a condition of furloughing, is that the government will pay, only if the employer continues to pay wages... if you're in a tiny business, and the only director, and it's only you who can run the payroll... then yes, of course you're going to have to do that work... and HMRC *must* disregard it.

Typing information into some payroll software, and into some banking app, is providing information... that's the definition...​

Never mind dear, you do it your way.

 

[DavidWH]

This was the exact reason for my question.

There is no definitive answer. There is no legal definition of "reasonable" and will always be a matter of opinion.

@Newchodge has provided a professional opinion, discussed this professionally, and provided references when asked.

I'm with @Ian J, Cyndy has over many years demonstrated her knowledge on these boards and earnt the respect of many. Scroll through the entire thread, read it and you'll see that the advice you've posted has been superseded by the government directive that Cyndy linked too.

Marcus doesn't need to argue with the IOC but support them! They're fighting and challenging the government for the very thing you want!

Just because you don't like the answer doesn't mean the person providing it is wrong.

@Gordon - Commercial Finance just seen your reply, some tongue in cheek sarcasm.

 

[marcus_bond]

This was the exact reason for my question.

There is no definitive answer. There is no legal definition of "reasonable" and will always be a matter of opinion.

@Newchodge has provided a professional opinion, discussed this professionally, and provided references when asked.

I'm with @Ian J, Cyndy has over many years demonstrated her knowledge on these boards and earnt the respect of many. Scroll through the entire thread, read it and you'll see that the advice you've posted has been superseded by the government directive that Cyndy linked too.

Marcus doesn't need to argue with the IOC but support them! They're fighting and challenging the government for the very thing you want!

Just because you don't like the answer doesn't mean the person providing it is wrong.

@Gordon - Commercial Finance just seen your reply, some tongue in cheek sarcasm.

I have no reason to doubt Cyndys past advice as regards regular employment law and payroll. But her interpretation of the law as regards the Chancellor's legal direction to HMRC on the 15th April is incorrect.

She has just advised a 2 person company, one of whom is the sole director... that they can't furlough themselves and continue to administer the company payroll...

That is totally wrong advice.

 

[marcus_bond]

Marcus doesn't need to argue with the IOC but support them! They're fighting and challenging the government for the very thing you want!

No, they are not... the IoD seem to be attempting to queer the pitch... to get more out of the Chancellor...

Directors who need to undertake important administrative duties to keep their company functioning legally, are supported by the Chancellors direction...

I don't want other directors, like sales directors etc, who have no legal administrative duties to perform, running around building their companies business whilst furloughed at the taxpayers expense.

So no, I don't support the IoD...

 

[Newchodge]

Directors who need to undertake important administrative duties to keep their company functioning legally, are supported by the Chancellors direction...

You just said it yourself. The wording in the Direction is "provision of other information relating to the administration of the director’s company" undertaking duties is not providing information. And the alternative is not to fail to pay employees. The alternative is not to furlough every director.

 

[DavidWH]

Or furlough for no less than 21days, run payroll, pay suppliers, do anything else on the one day you're not furloughed day, then furlough again for a further period. As previously suggested.

 

[marcus_bond]

You just said it yourself. The wording in the Direction is "provision of other information relating to the administration of the director’s company" undertaking duties is not providing information. And the alternative is not to fail to pay employees. The alternative is not to furlough every director.

What you are writing here is incorrect...

...Directors who do work... punching information into payroll software, writing a cheque, signing a cheque, sending a cheque, sending a bank draft, punching information into an accounts package, punching figures into a batch payment system, punching information into the HMRC CJRS online application, arranging PAYE payments, arranging pension payments... they are all provision of information to do with legal/critical administration of ones company...

The Chancellor has directed in para 6.6 that all these things must be disregarded by HMRC as regards the direction to "cease all work" in para 6.1a.

 

[Newchodge]

What you are writing here is incorrect...

...Directors who do work... punching information into payroll software, writing a cheque, signing a cheque, sending a cheque, sending a bank draft, punching information into an accounts package, punching figures into a batch payment system, punching information into the HMRC CJRS online application, arranging PAYE payments, arranging pension payments... they are all provision of information to do with legal/critical administration of ones company...

The Chancellor has directed in para 6.6 that all these things must be disregarded by HMRC as regards the direction to "cease all work" in para 6.1a.

Where is your quote from?

 

[marcus_bond]

Where is your quote from?

https://assets.publishing.service.g...4/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

 

[DavidWH]

That's the same document @Newchodge linked too, and I can't see your quote in there...

RTFF, we've been over this!

 

[Newchodge]

...Directors who do work... punching information into payroll software, writing a cheque, signing a cheque, sending a cheque, sending a bank draft, punching information into an accounts package, punching figures into a batch payment system, punching information into the HMRC CJRS online application, arranging PAYE payments, arranging pension payments... they are all provision of information to do with legal/critical administration of ones company...

That quote?

 

[marcus_bond]

That's the same document @Newchodge linked too, and I can't see your quote in there...

RTFF, we've been over this!

The definitions of 'provision', 'information', and 'administration' of a company in para 6.6 as regards work that is undertaken by a director which must be disregarded as work by HMRC, is really very clear.

 

[DavidWH]

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).

But nowhere does it say what tasks are to be disregarded. So where is the advice that covers this?

...Directors who do work... punching information into payroll software, writing a cheque, signing a cheque, sending a cheque, sending a bank draft, punching information into an accounts package, punching figures into a batch payment system, punching information into the HMRC CJRS online application, arranging PAYE payments, arranging pension payments... they are all provision of information to do with legal/critical administration of ones company...

 

[marcus_bond]

That quote?

That wasn't a quote, it was my example of the types of work, that meet the definitions of 'provision', 'information', and 'administration' of a company in para 6.6

 

[marcus_bond]

But nowhere does it say what tasks are to be disregarded. So where is the advice that covers this?

There is no possibility of the Chancellor providing an exhaustive list of the different types of structured data which may need to be supplied by a director to enable them to run their company.

 

[DavidWH]

@marcus_bond I'm not disagreeing with you, but there is no clarity, and it's all open to interpretation.

Employees and Self Employed it's clear as day, but for directors it's a little fluffy, and open to interpretation. If, and when they start checking these claims, who is it who determines what is administration of the company, and what is reasonable?

Quote below from the Gov website, updated on the 17/04/2020, which supersedes the earlier document linked to which was signed on the 15/04/2020

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.

Which aligns with my thoughts, and Marcus's thoughts... crack on pay your staff, pay your employees, and just don't be doing anything that results in an invoice.

 

[Newchodge]

There is no possibility of the Chancellor providing an exhaustive list of the different types of structured data which may need to be supplied by a director to enable them to run their company.

There is nothing to say this relates to being able to run their company.

How do you equate your list with this

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.

That quote is from here

https://www.gov.uk/guidance/claim-f...IYIA5I0HrF5NBOps8FS4y6vMM8xOYZ5oOatVw#history

 

[marcus_bond]

Quote below from the Gov website, updated on the 17/04/2020, which supersedes the earlier document linked to which was signed on the 15/04/2020

The guidance document you refer to (updated 17th April), is identical wording to the guidance provided by HMRC earlier in March.

The Chancellors direction to HMRC on 15th April (three days ago) is the actual law regarding CJRS.

The Chancellors direction to HMRC really does take away the ambiguities for furloughed directors. Well it does to me...

 

[marcus_bond]

There is nothing to say this relates to being able to run their company.

I appreciate it's densely written... but if I remove the first OR option to do with acts of parliament... we get this...

Work undertaken by a director of a company to 'fulfil' a duty or other obligation arising by [...] 'provision' of other 'information' relating to the 'administration' of the director’s company must be disregarded for the purposes of paragraph 6.1(a)​

if I then replace the key terms with alternative definitions...

Work undertaken by a director of a company to 'achieve' a duty or other obligation arising by [...] 'supply' of other 'facts' relating to the 'activity of running the business' of the director’s company must be disregarded for the purposes of paragraph 6.1(a)​

It should be clearer, that directors work (activities) to meet obligations by supplying facts/knowledge to enable them to continue to run their business is completely OK.

 

[lesliedocherty]

It seems we have directors wanting to furlough themselves and do 'some' work at the same time, and wanting other people 'us' to tell them that its ok to do it !!

 

[manwithnonames]

It seems we have directors wanting to furlough themselves and do 'some' work at the same time, and wanting other people 'us' to tell them that its ok to do it !!

Yeah it would be terrible if Directors who can make it through a general shutdown claimed furlough then - shock horror- inadvertently did work that lead to revenue./their company making out the other side.

The last thing we need is tax revenue whilst these greedy so and so's are claiming a princely 80% of PAYE!

I mean what do they do for the economy anyway?

I say if they take furlough- they should only be allowed to do ABSOLUTELY essential things such as putting out an ongoing fire in their office and this then needs to be proven via pics to a new HMRC portal.

Any companies making money whilst also having a furloughed Director should be then liable to a "survivor" tax of +7% CT to offset the harm they do to needy others such as the self employed.

 

[Interestedobserver]

I guess a director could create an automated email as follows to all enquiries:

I am currently furloughed. As such I am forbidden from paying any invoices owed.

Ps would they also be forbidden from sorting their employee payroll if their accounts staff are on furlough?

 

[UKSBD]

But nowhere does it say what tasks are to be disregarded. So where is the advice that covers this?

"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"

It doesn't list all the tasks that are to be disregarded because it tells you only the duties a company director is obliged to do under an Act of Parliament are the ones that are disregarded.

Does an act of parliament say a Director has to write a cheque, sign a cheque, send a cheque, send a bank draft, punch information into an accounts package, run a payroll, etc?

 

[Red Wood]

Anything... If you think UK Gov has resources to check who's doing what/where and when, you're mad!

 

[valakot]

Returning to this discussion, accountingweb has this article -
Coronavirus job retention scheme: Get the details right
and there is a part:
"Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns."
Does it include PAYE RTI returns?
But the grant is business income as per HMRC; work to generate this income would include making a claim under the scheme or supplying information for a claim. There seems to be a catch 22 here.

 

[Interestedobserver]

Anything... If you think UK Gov has resources to check who's doing what/where and when, you're mad!

Not now they don't. But I've read that they will be able to investigate what happens for upto 6 years and use whistleblowers to establish if furlough has been used incorrectly.

 

[DavidWH]

It seems we have directors wanting to furlough themselves and do 'some' work at the same time, and wanting other people 'us' to tell them that its ok to do it !!

Came for advice and opinions as we've received contradictory advice.

The advice we're following is from an advisor we know and trust, who has PI insurance should shit hit the fan.

@valakot but many SME's wont run their own payroll and will outsource it, who will possibly also handle the claims.

provided they do no more than would reasonably be judged necessary

Once again who's judging what is necessary? I don't believe there's a legal definition of necessary and is a matter of opinion. What's necessary for one person, may not be for another.

...they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue...

Furlough claims are not normal circumstances and most of the population had likely never heard of the claim until a few weeks ago.

Claiming furlough and continuing to sell your products and services, generating sales income as usual is explicitly a no no.

 

[Interestedobserver]

Came for advice and opinions as we've received contradictory advice.

The advice we're following is from an advisor we know and trust, who has PI insurance should **** hit the fan.

@valakot but many SME's wont run their own payroll and will outsource it, who will possibly also handle the claims.



Once again who's judging what is necessary? I don't believe there's a legal definition of necessary and is a matter of opinion. What's necessary for one person, may not be for another.



Furlough claims are not normal circumstances and most of the population had likely never heard of the claim until a few weeks ago.

Claiming furlough and continuing to sell your products and services, generating sales income as usual is explicitly a no no.

Yes I don't think anyone doubts the last bit

The fact people are coming on here to get answers to what a director can and can't do says a lot

Right now there's confusion in so many different places at the same time

And this is just one area

 

[Newchodge]

As I said before, possibly on another thread, I don't understand why direcros of owner/single employee ltd companies are not screaming for the same right as is available (apparently, as I cannot find the reference) to the self employed - to continue to run their business.

 

[Gordon - Commercial Finance]

As I said before, possibly on another thread, I don't understand why direcros of owner/single employee ltd companies are not screaming for the same right as is available (apparently, as I cannot find the reference) to the self employed - to continue to run their business.

Many are screaming for it Cyndy, but it seems to be falling on deaf ears. It feels like the gov are thinking they’ve announced all the measures they need to protect businesses, and now they’re on to the next thing.

 

[marcus_bond]

"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"

It doesn't list all the tasks that are to be disregarded because it tells you only the duties a company director is obliged to do under an Act of Parliament are the ones that are disregarded.

Does an act of parliament say a Director has to write a cheque, sign a cheque, send a cheque, send a bank draft, punch information into an accounts package, run a payroll, etc?

No problem at all.

Directors can work in any way that is necessary, to supply information to meet *any* duty or obligation, related to business of running their company. Because such work must be disregarded by HMRC with regards to a CJRS claims.

There is no such direction to disregard work that does not not meet the test of 'duty or obligation'. Neither is there any direction to disregard other types of work required to supply goods, or services.

If your company has an employee, and an obligation to pay the employee wages, you are fine to do *any* work required to supply information necessary to fulfill that obligation.

Similarly, if your company have entered into a contract to buy something, with an obligation to pay the supplier for the goods they have provided. You are fine to do *any* work required to supply information necessary to fulfill that obligation.

 

[marcus_bond]

Returning to this discussion, accountingweb has this article -
Coronavirus job retention scheme: Get the details right
and there is a part:
"Owner-managed businesses can make a claim from the CJRS, effectively they will be furloughing themselves and the understanding is that they do no income generating work for their business but can continue to run the business from a statutory perspective, for example preparing their accounts and returns."
Does it include PAYE RTI returns?
But the grant is business income as per HMRC; work to generate this income would include making a claim under the scheme or supplying information for a claim. There seems to be a catch 22 here.

Yes that's fine... there is no catch 22... Directors furloughed under CJRS rules can continue to do any work required to supply information, to fulfill any duty or obligation related to the running of their business. Because HMRC have been directed to disregard such work for the purposes of CRJS.

Income generation is not even mentioned.