HMRC published further guidance on 15th April along with the Chancellor’s direction (legislation) document, which you can read here.
Whilst the scheme and the guidance are not perfect, HMRC have worked extremely hard to provide as much as they can, when they can. I am in regular contact with HMRC both to obtain answers to questions and to provide feedback to help improve the guidance. What is becoming clear, is that the Government and HMRC are trying to be as pragmatic and as flexible as possible. This can cause confusion as the goal posts move, or do they? Whilst the latest guidance doesn’t replace the original, it does allow for some simpler, common sense approaches, especially around what salary figure to use.
Previously the legislation stated that only those who were on the payroll and were on a real time information (RTI) submission on or before 28th February would be eligible for the Job Retention Scheme (JRS). From 15th April this has changed to all those who were on the payroll and a submission made to HMRC before 19th March. The impact of this change will mainly affect weekly/fortnightly/4 weekly pay frequencies, but could also impact/help those, who for example, pay on the 15th of the month and are salaried. If you continued to pay people whether at 80% or otherwise, what this means is if you have furloughed them you can now add them to your claim submission.
However, this amendment is not consistent throughout the guidance in that certain reference points are still as at 28 February 2020. For example, if you made an employee redundant or they stopped working for you after 28 February you are still eligible to re employ them and put them on furlough. They have clarified the position where an employee worked for various employers throughout the year, in that if only working for one at a time, only the current employer could re-employ and furlough.
There is also some additional and helpful information surrounding those employers who have been involved with a Transfer of Undertakings (TUPE) exercise and or a payroll consolidation.
There is also clarification around keeping records for those you furlough namely, employers must confirm in writing to their employees that they have been furloughed and that a record of this must be kept for at least five years. This will be very important should HMRC conduct a compliance inspection in the future.
There is a little more flexibility surrounding what earnings to use. Employers who have used a regular fixed salary as at February, in line with the original guidance can continue to do so, however employers could look to use the pay in the immediate pay period before 19th March. For many employers who have already made payments for March and April, it is unlikely you would look to change your method now, but the option is there.
The guidance on actual calculations hasn’t been published yet, so as long as (in Karen Thomson’s view) a common sense approach is taken to determine the pay that should be used, and in no way is intended to defraud HMRC or the government then most calculations will be ok. There is still confusion around whether car allowances etc. can be included. The guidance doesn’t specify items other than some examples of what is permitted; therefore, employers will need to decide whether an item paid is “obligated”. Some have interpreted this as what is in a contract and negotiation to remove it might mean it is an obliged payment so are included.
Also published in this latest guidance was information surrounding the portal which will be used to reclaim monies. portal is expected to be available from Monday 20th April 2020. It is impressive that a government department has managed to design and implement this facility in such a short space of time. The Chancellor and the head of HMRC, Jim O’Hara confirmed testing has been conducted. What will not have been tested, as it would be impossible to do so is the volume expected. Therefore, to help manage your expectations when submitting information to the portal if it runs a bit slow, or indeed isn’t available for periods of time, bear with it as this is a brand-new portal.
Many of our clients have asked if Armstrong Watson will be able to submit these returns on their behalf. As yet we do not know the answer to this, which we appreciate isn’t that helpful. Payroll providers, including Armstrong Watson have agreements in place to allow us to send and receive information from HMRC, but this does not extend to acting on behalf of the client for PAYE matters. We have applied to HMRC for permission to do so but as things stand currently, are not able to do so. We are hoping that we will get clarification on this point over the coming days and will be able to submit these returns on behalf of our clients. There is additional work to do in order to submit returns on behalf of clients, so there will be an additional cost that we will have to pass on to clients that need or want us to make these submissions on their behalf.
Should you need us to do this for you, please contact us by contacting your usual point of contact or e-mail us at email@example.com.
Should you use a payroll provider to process your payroll, they should be able to provide you the payroll data you will need to submit a claim.
There will be two separate journeys: one for those with under 100 furloughed employees and one for those with 100 or more employees. Those with less than 100 will need to enter basic details for each employee line by line. Those with 100 or more will be able to submit a file in in format .xls .xlsx .csv .ods. In both cases the information for each employee will be name, National Insurance number, claim period and claim amount, and payroll/employee number (optional). Karen and other stakeholders have asked if it will be possible for all employers to submit a file, rather than line by line and awaits the outcome of that request.
A slight change is also to the minimum three weeks (21 calendar days). Whilst this rule still applies, you can make a claim for example for your April payroll but perhaps it includes a week not yet served. As long as the employee you are making a claim for will be furloughed for the minimum three weeks you can still claim, even if the three weeks hasn’t completed yet.
For an agent to register to do this on your behalf will take time and perhaps too much time for those who need to claim at the earliest opportunity. Therefore, it is vital that if you do not have an online PAYE account you register now; you will need this in place to start the reclaim journey.