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.
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).
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.