Financial support being offered by HMRC may come too late for some employers to benefit.
While claims for the Coronavirus Job Retention Scheme (CJRS) can be backdated to March 1, HMRC’s online registration service for the scheme will not be available until the end of April.
Lucina Coleman, a business recovery partner at PFK Francis Clark, says this is an important time for directors to look at their cash flow and determine what is necessary to keep viable businesses running.
However, she also noted that it was important to look at the business’ true viability before making any decisions on loans and schemes.
“If your business was struggling pre-coronavirus, perhaps now’s the time to make those difficult decisions and to talk to an insolvency practitioner,” Coleman says. “The worst thing you could have, I suppose, is when you close the doors and your company ends up in liquidation, and that’s the end of your business.
“But, the best thing is going to be that there’s going to be some sort of restructuring that can go on, and [that comes] from making those difficult decisions now.”
To benefit from the scheme, UK employers must have a PAYE payroll scheme implemented on or before February 28, be enrolled for PAYE online, and have a UK bank account tied to their business.
It will be up to businesses themselves – not HMRC – to determine what needs to be claimed.
Coleman notes that for businesses who were otherwise viable before coronavirus hit, the government schemes may be enough—both in grants and loans—to support the company throughout the UK lockdown.
Other modes of assistance, like the three-month suspension of wrongful trading provisions from March 1, may provide some relief for businesses. However, Coleman warns that this is the only director responsibility to have been lifted in this way.
Company directors, including those who direct their own personal service company, are also eligible to receive furlough through CRJS so long as it is approved by the board of directors and they are being paid at the furlough rate of their normal salary.
Coleman also warned that alongside these options, directors need to be especially careful about asset disposal and paying creditor payments.
To file for CJRS, companies need to provide the following:
- The claimant’s name and phone number
- How many employees will be furloughed
- A relevant ePAYE reference number, bank account number and sort code
- The claim period, as well as the amount claimed
HMRC will pay companies’ UK bank accounts through BACS, checking the claim using HMRC’s Real Time Information system. Employers will still have to pay NICs, although these—alongside pension costs—will continue to be tax deductible as usual.
Although employees can be furloughed multiple times, each separate furlough period must be at least three consecutive weeks.
Full-time, part-time, zero-hour, agency contract and flexible contract employees are all eligible for furlough, but each employee needs to be notified of this in writing.
Outside of employees, CJRS can also be used to support PAYE-paid limb (b) workers, agency workers, office holders, and salaried members of LLPs.
Additionally, businesses with apprenticeships can furlough these apprentices while they continue to train; however, they must be paid either the apprenticeship minimum wage, national living wage or national minimum wage.
If there is any discrepancy between the amount claimed through the scheme and the apprentice’s minimum wage, the company must pay this themselves. These grants cannot be used as a substitute for employees receiving proper redundancy payments.
Additionally, employers can claim enhanced contractual pay through CJRS for any employees currently on maternity, adoption, paternity or shared parental pay.