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COVID19: Coronavirus Job Retention Scheme (CJRS) – emerging issues & answers

Updated: 22 April 2020: Following emerging issues about the Coronavirus Job Retention Scheme (CJRS) from HMRC, the ICAEW has released amended guidance. We have updated our “top 10 questions answered” to include these amendments

  • 1. Agent access to the system
  • 2. What furloughed directors can do
  • 3. Requirement for a national insurance number
  • 4. Requirement for a UK bank account
  • 5. Requirement for an SA UTR, CT UTR or CRN
  • 6. TUPE transfers and payroll consolidation
  • 7. Employment allowance
  • 8. Holidays and bank holidays
  • 9. Can furlough periods be extended?
  • 10. State Aid
  • 11. Annual payroll periods
  • 12. Correcting mistakes in a CJRS claim
  • 13. Definition of a claim period
  • 14. When to make a claim
  • 15. 100 employee minimum for uploading spreadsheets
  • 16. Working vs calendar days in calculations
  • 17. Address required on the CJRS portal

1. Agent access to the system

HMRC has now provided details to ICAEW’s Tax Faculty of what was needed to authorise an agent to make claims for CJRS grants. HMRC is still working on a simpler process

2. What furloughed directors can do

HMRC’s guidance says that furloughed directors can carry out duties which are necessary to fulfil statutory obligations they owe to the company. It is not clear whether this includes preparing accounting records, VAT returns, passing information to the accountant to allow then to prepare accounts and returns, pay suppliers, process payroll etc.

Current ICAEW advice: The Tax Faculty suggests taking a pragmatic, sensible approach, avoiding any activity that could be construed as generating revenue.

3. Requirement for a national insurance number

The application for a CJRS grant requires a national insurance number. HMRC has confirmed that organisations claiming for 100 or more employees and who are uploading a spreadsheet should include a payroll or employee reference number if no national insurance number is available. The missing national insurance number will not cause a problem with the application, but the employer may be contacted to query why a national insurance number has not been provided. Where an employer has fewer than 100 furloughed employees, but has one or more without a national insurance number they should contact the COVID-19 helpline on 0800 024 1222 who can process their claim over the phone.

4. Requirement for a UK bank account

One of the requirements for a CJRS grant is having a UK bank account. Some employers use a UK representative to handle their payroll and payments go through the representative’s UK bank account (sometimes known as a client account). The employer does not have their own UK bank account but operates all payments via the client account. This may prevent some claims.

It appears that employers without their own UK bank account will not be able to make claims until such time as HMRC provides a solution.

5. Requirement for an SA UTR, CT UTR or CRN

HMRC’s guidance indicates that the application for a CJRS grant requires the employer to provide one of: a self-assessment UTR, a corporation tax UTR or a company reference number. The workaround for employers without one of these identifiers is to answer ‘No’ to the questions:

  • Does the employer submit a company tax return?
  • Is the employer registered for self-assessment?
  • Is the employer registered at companies house?

The applicant or agent will then be asked another question, which is: ‘What is the name of the employer?’ and the claim can proceed.

This means that employers who do not have any of these references (eg, those who employ domestic staff and some overseas companies) are not prevented from making claims.

6. TUPE transfers and payroll consolidation

HMRC’s guidance says that CJRS grants are available where employees transfer under TUPE or PAYE business succession rules after 19 March 2020, or a group of companies consolidates multiple PAYE schemes after this date. Any transfers made between 28 February and 19 March 2020 would mean that no claim would be possible.

This issue is likely to affect very few cases as the transfer would have to fall between the 2 dates mentioned. ICAEW’s Tax Faculty would like to hear about any specific cases that arise, please contact taxfac@icaew.com.

7. Employment allowance

It was not clear how the grant interacts with the employment allowance. On 17 April HMRC provided this clarification in its guidance, Work out 80% of your employees wages

“In calculating the total employer National Insurance contributions paid in any pay period, the employer should subtract any employment allowance used in that pay period. If you have not, or do not expect to pay any employer national insurance contributions in a pay period as a result of the employment allowance, you should not claim any employer national insurance contributions costs for furloughed employees in that pay period. If you expect to exhaust any employment allowance in a pay period then you should claim the lower of the employer national insurance contributions grant calculation, and the employer national insurance contributions costs that you paid, or expect to pay across your entire payroll.”

ICAEW’s Tax Faculty suggests that it may be simpler not to claim employment allowance until later in the tax year. All claims for employment allowance had to be reset in April. This avoids the need to adjust the grant for employment allowance.

8. Holidays and bank holidays

HMRC’s guidance was silent on the impact of bank holidays and annual leave.  

On 17 April HMRC provided this clarification in its new guidance, Work out 80% of your employees wages:

“Furloughed employees continue to accrue leave as per their employment contract.

“The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

“Employees can take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

“Employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

“If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

“During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.”

9. Can furlough periods be extended?

HMRC’s guidance says: “If your employer chooses to place you on furlough, you will need to remain on furlough for a minimum of three consecutive weeks. However, your employer can place you on furlough more than once, and one period can follow straight after an existing furlough period, while the scheme is open.”

ICAEW’s Tax Faculty had interpreted this to mean that once an employee has been furloughed it is not possible to extend the furlough period.

ICAEW now understand from HMRC that it is possible to extend furlough periods. The update provided by HMRC says: “Furlough periods can be extended beyond the minimum three-week period. Each consecutive period counts as a single furlough period, regardless of the initial period. The clock is only reset should the employee return to work and then be put on furlough. For example, an initial furlough period of three weeks could be extended for a further two weeks, provided the employee does not return to work at any point.”

10. State Aid

HMRC’s guidance is silent on whether CJRS grants are state aid; until HMRC advises otherwise assume that CJRS grants do not need to be reported as state aid.

11. Annual payroll periods

The HMRC CJRS portal is rejecting claims from some annual payrolls. The legislation – paragraph 5(a)(i) of the direction – makes it clear that claims must relate to an employee to whom the employer has made a payment of earnings in the tax year 2019/20 that was made before 19 March 2020. This issue has been raised with HMRC, but it would appear that the system is working in accordance with the legislation and the annual payment must have been included in an RTI report filed by 19 March 2020.

12. Correcting mistakes in a CJRS claim

Noting that it is not currently possible to make changes to a claim, ICAEW’s Tax Faculty asked HMRC how employers can correct mistakes made when making a claim.  

HMRC responded: “The ability to amend for future claims will be available, but we do not have a process in place at the moment.”  

Employers should take care before running their payroll for furloughed employees and before making a claim for a grant under the CJRS portal. The need to exercise due care is highlighted by the fact that there is no ability to correct mistakes at the current time, but care should be exercised for the duration of the scheme regardless of whether mistakes can be corrected. A related issue is what to do if a claim has been incorrectly rejected based on HMRC saying that the number of employees on the claim exceeds the number on payroll when there is no logic to the rejection. The employer cannot re-submit a claim for three weeks.

13. Definition of a claim period

ICAEW’s Tax Faculty asked HMRC whether all employees furloughed during a month have to be included in one claim as some employers may find it easier to track claims for segmented sections of the payroll, (eg, by location or by period of furlough).  

HMRC responded: “A claim period is whatever the employer wants to make it – so can be a week, a month, etc depending on what suits the employer – they are likely to want to use a claim period that works best for them. Customers cannot not make multiple claims for different groups of employees covering the same claim period from the same PAYE scheme. For any given claim period, all employees on a PAYE scheme must be included. A subsequent claim for further employees within the same claim period will look like a duplicate claim to the system.” 

ICAEW’s Tax Faculty understands that the reason for excluding multiple claims for the same claim period is to protect the system from being abused. A claim should be made for each PAYE scheme operated by an employer. Care should be taken to include all eligible employees for a claim period within a single claim as an additional claim is not possible for the same claim period.  

14. When to make a claim

ICAEW’s Tax Faculty requested clarification about claim periods and payroll as HMRC’s guidance indicates that only one claim can be made in a claim period and this must be shortly before or during running payroll.  

Many employers operating a monthly payroll, for example, will already have run their April payroll and will certainly have done so for March. The Tax Faculty requested clarity around whether a claim could be made for the majority of employees where all details to make a claim are known and then a separate claim for employees without a NINO.  

HMRC responded: “Claims can be made in anticipation of an imminent payroll run, at the point you run your payroll or after you have run your payroll. Claims should cover all relevant furloughed employees for a claim period. A separate claim needs to be made for each PAYE scheme operated.”  

A claim should be made for each PAYE scheme operated by an employer. Care should be taken to include all eligible employees for a claim period within a single claim as a further claim is not possible for the same claim period. You can claim 14 days in advance so claims cannot end more than 14 days ahead of the date of the claim. You can only make a claim every three weeks so those with weekly payrolls will have to aggregate claims for three weeks payroll.

15. 100 employee minimum for uploading spreadsheets

Claims for fewer than 100 employees have to be made directly in the HMRC portal. Claims for 100 employees or more can be made by uploading a spreadsheet with the details. This makes it more onerous for smaller employers and for agents handling claims for a number of smaller employer clients. The problem is exacerbated because of the limited time in which the forms must be completed on the system (30 minutes). Members have asked why this limit has been imposed and why it is not possible to upload spreadsheets for employers with fewer than 100 furloughed employees. 

HMRC has indicated that it will consider reducing the 100-employee requirement and allow file uploads for smaller employers, but this may not be possible.

16. Working vs calendar days in calculations

HMRC’s guidance says that calculations should use calendar days when working out the amount of the grant for a period in which an employee has been furloughed for only part of the payroll period. Many employers use working days when doing payroll calculations. HMRC has confirmed that calendar days must be used.

17. Address required on the CJRS portal

The HMRC CJRS portal includes a screen which asks for: “The address associated with the employer’s bank account” – this is just after the bank account details have been requested. 

There has been some confusion about whether this should be the employer’s address or the address of the bank. ICAEW’s Tax Faculty understands that the address the employer’s bank statements are sent to should be provided. 

HMRC guidance:  

Team HB would like to thank the ICAEW for providing details for our summary above.

We hope this information helps you and we are here for you during this difficult time. We will continue to keep you updated as the Government releases new information. Our business contingency plan is in place and we will do everything we can to support our clients during this uncertain period, please do not hesitate to contact us here if you have any concerns or queries.

Visit our COVID19 Business Hub for more information


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