20 April 2020 marked the one-month anniversary of the
Coronavirus Job Retention Scheme (CJRS) announcement by UK
Chancellor, Rishi Sunak. It was also the date that Her
Majesty's Revenue and Customs'
(HMRC's) long-awaited Online Portal – the mechanism
by which employers with a UK payroll can reclaim 80% of furloughed
workers' wages – went live.
By the end of the first day, an estimated 140,000 companies
submitted claims through the Portal. Because of the fervour that
accompanied applications, the Portal had to be taken down at 8:00
am due to capacity issues. It had only opened at 5:30 am.
Key lessons have since been learnt about how the CJRS will work in
practice, including around how companies should approach submitting
their claims. Here are just a few.
Access to the Portal
Employers can access the Portal through the Government Gateway. Accordingly, companies
will need to have a Government Gateway User ID and password to make
use of the CJRS. If they would like their payroll provider to make
claims on their behalf, that provider will need to have been
appointed as their Agent. Companies will also need to be registered
for PAYE Online, have a UK bank account and have submitted RTI
(Real Time Information) payroll data about each of the employees
they are claiming for, to HMRC, before 19 March 2020.
All companies intending to access the CJRS will need to submit
certain information through the Portal, for HMRC
to assess the eligibility of a claim. Not providing the required
information may delay payment. Companies will also need to take
specific steps after submitting a claim to retain documentation and
notify employees.
Claim Period
Guidance on the CJRS has always suggested that HMRC would permit
the submission of one claim per company, per pay period. What was
not clear was how this would work in practice, how HMRC would
police this and how companies were expected to deal with furloughed
workers where different start and end dates for furlough leave were
a factor.
It is now clear that eligible companies must establish a
"claim period" (which, in most cases from April onwards,
will be the start and end of a month) and notify HMRC of this as
part of their claim. One claim only, encompassing the wage costs of
all furloughed workers within a claim period, should be submitted.
A company can then submit a further claim in its next claim
period.
For example, if you are claiming for the period 1 May to 31 May,
you should include the full amount you are claiming in respect of
all your furloughed workers in this period. You should also adjust
your calculations accordingly if an individual's period of
furlough leave begins or ends at any time during the period.
For March and April (where elements of the claim may be
retrospective given the Portal was not in operation), one claim can
be submitted for both months, as this will be deemed one
"claim period". However, if you were to separate those
months and submit a claim for March now, you would not be able to
submit your April claim until the following month.
It should be easier for companies to claim month by month, as
unless further employees are furloughed, or employees return to
work, claims will be broadly similar in their amount. However, it
is critical to calculate claims accurately (see below).
Calculating Claims
HMRC has provided an online calculator which companies can use to
calculate their claims in straightforward situations. However,
there were concerns around the accuracy of this calculator when the
Portal first launched, and we recommend that companies take
responsibility for calculating their claims. It can be a
complicated process – particularly in respect of a
company's first claim period where this does not encompass one
whole month.
Correctly calculating claims will involve understanding precisely
what can and cannot be claimed. For the avoidance of doubt,
payments which can be claimed for include but
are not limited to 80% of an employee's wages, employer NI
contributions on that 80% of wage, and statutory minimum employer
pension contributions.
If you are in any way unclear on what you can claim, we strongly
recommend that you take appropriate advice to avoid HMRC rejecting
your claim. HMRC has also reserved the right to retrospectively
audit claims, and we fully expect them to begin doing so (and to
adjudge certain claims as fraudulent) once the CJRS has
closed.
We also strongly suggest calculating your claims before accessing
the Portal, as user sessions will time out after 15 minutes of
inactivity and cannot be saved or returned to at a later date. It
is not a legal or compliance consideration and does not prevent you
from re-entering the Portal to start again – but it will
undoubtedly be irritating!
When to Claim and Receiving Wage Costs
HMRC guidance on its payment timeframe has varied. Currently, we
understand that HMRC aims to make payment via BACS for eligible
claims within six working days of receiving an application. This is
intended to provide a chance for HMRC to run some initial checks to
determine a claim's legitimacy.
Accordingly, most companies will wish to submit their claims in
advance of their monthly payroll cycles, so that reclaimed wages
are already in their UK bank account ahead of paying salaries.
Claims for the month of May, for example, can be made up to 14 days
before a company's pay date. If, however, a company does not
receive monies from HMRC in time, it is important to note that it
will remain under an obligation to pay its employees as usual,
subject to any agreed wage deferral.
Provided the claim submitted is an eligible one, the company shall
then be reimbursed by HMRC for the portion of wage costs it
claimed.
Support from Vistra
Vistra can support you with all aspects of claiming via the CJRS,
including agreeing and placing employees on furlough leave,
interpreting HMRC guidance and the CJRS Treasury Direction,
assisting with claim calculations and tax elements and acting as
Agent to make claims through the Portal where we are your
designated payroll provider.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.