Publish Date

Jun 15, 2020

CJRS – Flexible Furloughing – The Updated Guidance

A&M Tax Advisor Update

On Friday 12 June further complex guidance was published on the CJRS. This is likely to cause a headache for many payroll managers given how complicated the scheme has now become coupled with the pressure of getting the calculations right.

The key points to note are:

  • You must claim for all periods up to and including 30 June 2020 by 31 July 2020 at the latest.
  • This will include a claim for those furloughed for a minimum of 3 weeks before 30 June, so those furloughed by 10 June 2020.
  • From 1 July 2020 onwards, you can only claim for periods falling in each calendar month – you cannot cross calendar months.
  • This means that for those that have four weekly or fortnightly payrolls, you are going to have to claim for periods separate from your payroll dates.
  • You can claim for periods of 7 days or more, but you can only make one claim per calendar month.
  • You can claim up to 14 days in advance, but you must also know the hours your staff will work, so this becomes tricky and cash flow consequences need to be considered carefully.
  • Your claim has to be limited to the maximum number of staff claimed in a previous claim to 30 June 2020. There are some exceptions to this for those returning from parental leave.
  • You still have to identify employees by fixed or variable pay, to then work out their furlough period versus worked periods.
  • From 1 August the employer has to pay the Employer National Insurance and pension costs –
    • This gets tricky for those that run fortnightly or four weekly payrolls which stagger July and August, and even more complicated if you also have monthly paid staff as well all on the one PAYE scheme.
  • From 1 September employers will have to fund 10% of the furlough pay in addition to the full costs of working days.
  • From 1 October this increases to 20% of furlough pay, plus the full costs of working days.

Employers will also have the ability to pay back claims if amounts have been overclaimed, coupled with making corrections for the claim periods to 30 June 2020. Across all of the above, it remains imperative that full records are maintained, including an audit trail of which version of HMRC’ guidance you applied at the time of each claim, along with any subsequent adjustment made. All correspondence, communications and guidance issued to employees should be retained, along with their formal changes to their contracts and working versus furloughed hours.

HMRC have provided 30 examples of how the new scheme is to be applied in practice, which illustrates just how complicated it is becoming. Having to de-couple the payroll calculation from the furlough claims, but also ensuring the right amounts are paid to staff, is going to be a challenge for anyone with anything but the simplest of payrolls…