woolmerandkennedy

Can an employee still do some work if they are furloughed?

HMRC and government guidance states that an employee is not to carry out work of any kind while furloughed. They may carry out training, for which they should be paid, but they should not carry out any operational duties.

Can Directors be furloughed?

Yes, Directors can be furloughed. They too must not be carrying out any revenue generating activities, but they can carry out admin tasks in order to ensure their business is ready to go once the lockdown is complete. This will, however, be limited to 80% of their monthly salary, and not inclusive of any amounts taken as dividends.

What happens with employees who receive regular commission?

Commission is not to be included in calculations for furloughed workers. If employees receive a salary + commission package, the 80% furloughed amount will be based on their salary only. Any top up on top of this is at the business’ discretion, and will not be repaid under the Job Retention Scheme.

What if I can’t afford to pay their wages?

If there is no physical cash available to pay the wages, then they cannot be paid. If all avenues have been explored, such as VAT deferrals, Time to Pay arrangements on PAYE/Corporation Tax/CIS, payment holidays on regular commitments and the business has been unable to get a loan, then the final option is to communicate to the employees that they will be getting paid, but not until the government repays the money under the furlough scheme, and wait for the grants to start being repaid in this way.

What about if 80% of my employee’s wages will put them on less than minimum wage?

The NMW and NLW do not apply to furloughed workers. These can only apply to hours worked, and as a furloughed employee there are no hours worked, thus NLW and NMW do not apply.

Is the portal open for furloughed worker reclaims yet?

In short – no. There has, however, been some good news released in the last few days. There have been a number of select Employers chosen to Beta test the portal and it has worked well, and should be able to cope with 450,000 claims per hour. The expected launch date for this is 20^th April, and it is thought that this will give HMRC time to process repayments in time for the end of April, both for April and a backdated claim for March. As soon as this is officially open we will notify our clients and begin assisting with claims for those whom we process the payroll.

How do I upload my claim to the Portal?

If we run your payroll we do this for you free of charge – if you run your own payroll we will help you with guidance. The portal is likely to be fairly simple and will require some key information – PAYE Ref, Details of Each Furloughed Worker, Bank Details etc.

Is anything being done yet for employers to be able to furlough employees who are new starters in March?

Unfortunately not. This was brought up to the Chancellor, Rishi Sunak, last week, and the suggestion from the government is to contact your previous employer and ask to be rehired and furloughed through them, and then let go at the end of the period. This is not an option for many employees, as quite often employers are not that happy when an employee moves on, so this is not the best solution.

I have a member of staff currently on maternity leave. Can I put her on furlough and reduce how much I pay her?

Statutory maternity pay (‘SMP’) is governed by the Social Security Contributions and Benefits Act 1992. The amount of SMP is calculated on the basis of the salary actually received during the 8-week period ending immediately before the 14th week before the expected week of childbirth [see https://www.acas.org.uk/managing-your-employees-maternity-leave-and-pay/…. As such, if an employee has already commenced their maternity leave, then the amount which they are entitled to receive will have already been determined. It would not be permissible to reduce the amount to which they are entitled by statute by seeking to put them on furlough. However, in theory, there is nothing to prevent you from placing an employee on furlough who is on maternity leave (subject to my observations below). The government guidance on those on maternity leave is that:

“If you offer enhanced (earnings-related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.”

Thus it would appear that if your business offers enhanced contractual maternity pay, then it would be possible to furlough that employee in order to receive financial assistance with the payment of any enhanced maternity pay. However at present, it is not entirely clear how this would work in practice. There is nothing in the guidance which would prevent a woman on maternity leave from agreeing to be furloughed, thus bringing her maternity leave to an end. This would likely prevent her from returning to her maternity leave at a later date.

I have a pregnant employee and I understand that she is therefore in a high-risk category- can I automatically put her on furlough leave?

Given that the advice for pregnant women is to stay at home and avoid social contact as much as possible, many pregnant women may be keen to be put on furlough leave. However given that maternity pay is calculated on the basis of pay actually received during a set 8-week period, some mothers-to-be may be concerned about the financial impact on their maternity pay of being furloughed and may, therefore, wish to continue to work and receive full pay, if possible. The best thing for businesses to do is to have an open dialogue with pregnant employees about these issues and ascertain what your employee wants to do as a starting point. It may well be that in your particular industry, it is simply not possible for a pregnant woman to continue to work (e.g. a factory worker in a factory which has closed) and so there is no other option than to put them on furlough. However many businesses are able to continue providing work for staff (for example, by providing them with a computer and allowing them to work from home). If a pregnant employee was able to continue to work from home, yet was furloughed because of her pregnancy, then you may well face a claim for direct sex discrimination.

Do I still need to file my VAT return if I’m going to defer my payment, and do I need to notify HMRC I am going to defer?

Yes – the VAT return does still need to be filed. There may still be penalties/surcharge periods imposed for any late VAT returns. Payments can be deferred once the VAT return is filed however, and you do not need to notify HMRC of your decision to do so. This is for any liabilities due between 20^th March 2020 and 30^th June 2020. Payments for these should be made before 31^st March 2021. Any business who would usually pay VAT by Direct Debit does need to cancel this with their bank if they are going to take advantage of this deferral as HMRC will still try to take it. Any refunds/reclaims will be repaid by HMRC as normal.

Can I defer my PAYE/Corporation Tax/CIS payment without notifying HMRC?

You can defer it – but you cannot do so without notifying HMRC, this only applies to VAT. In order to do this, you need to set up a Time to Pay arrangement with them. You can do this by calling their dedicated helpline, the number for which has now changed, on 0800 024 1222.

How does my business apply for the small business grant?

Any business occupying a property and receiving SBRR or RRR will be notified by their local authority of their eligibility for a £10k grant. There is no application process and you do not need to do anything. Local authorities will be in touch in due course. The same applies for any rates-based grants available, including the Business Rates Holiday and the Cash Grant for Retail, Hospitality and Leisure.

Has anyone received their Small Business Grants yet?

Many of those eligible for the grants based on small business rates relief have now been contacted, and many have completed the application process. The payment date is Council-dependent, we have had reports of Tonbridge and Malling paying out for this, but others, such as Maidstone, have opened up applications but not released funds yet. We will update as and when our clients feed this information back to us.

We don’t have a business premises – is there a grant available to us?

Unfortunately not – all grants are rate-based and some are industry dependent. Therefore without a business premises, you don’t qualify for business rates and therefore no grant is applicable.

What support is now available for the self-employed?

Self employed individuals are now able to claim for up to £2,500, or 80% of their average monthly trading profits from the 16/17, 17/18 and 18/19 tax years. This is not income, but profits, so the element that tax has been paid on (income less expenses). If there are less than 3 returns available, this figure will be taken form the returns available. This is not open to people who were not self employed during 18/19, those who are primarily receiving income from an employment, have profits of over £50k.

Are Directors eligible for support under this scheme?

No – Directors are not self-employed, they may have to file a self-assessment tax return, but this does not make them self-employed. Unfortunately, dividends are classed as investment income, not trading income and therefore is not qualifying income.

Am I eligible for a Business Interruption Loan?

If you are a business that would otherwise be in a position to receive finance if it wasn’t for the drop in trading due to COVID-19, then it is highly likely you would qualify for a Business Interruption Loan. You must be able to show a drop in trading as a result of the current situation.

Apparently the banks have not been very forthcoming with this support and passing on the government guarantee, is this true?

This was the case, however the government passed new legislation over a week ago to force banks into offering these schemes and passing on the guarantee, whereas prior to this Directors were being asked for personal guarantees. This is not to say they won’t ask for guarantees for the additional 20% not backed by the government (they will only back 80%) but this may make this option more attractive to businesses feeling the effects of COVID-19.

Who provides the loan?

Most of the UKs major banks offer this, along with a number of alternative lenders. It is recommended that your first port of call should be your current banking provider.