01 December 2020
Samantha Mann MAAT MCIPPdip, CIPP policy and research technical lead, delves into the intricacies and timings of recent sudden changes which unsurprisingly have prompted concerns for payroll professionals
The year 2020 will be remembered for many reasons. For the professionals serving employers through the delivery of payroll services, whether for colleagues or clients, 2020 has provided us with ample tests of our ability to respond to change in a way we could never have imagined even in our wildest nightmares.
With just 24 hours until it was due to go live, guidance was finally published for the job support scheme (JSS). However, within 24 hours of this prime minister Boris Johnson was announcing that a four-week period of lockdown in England would begin from 5 November. This led to the announcement that the JSS would be postponed and the coronavirus job retention scheme (CJRS) would continue for a further month, subsequently confirmed by the chancellor, Rishi Sunak.
The various Covid-19 restrictions may have prevented us from having anyone knocking at our doors on 31 October, for the annual trick or treat goodies, but we didn’t entirely escape this Halloween tradition. Did the news from the prime minister and the chancellor deliver trick or treat?
JSS batted to the long grass with JRB
Originally, the prime minister said that the CJRS would be extended until December but in an announcement on 5 November, the official date England started its national lockdown, the chancellor declared that CJRS would be extended until 31 March 2021, with no gap from 31 October when the scheme was due to close.
The rate of government support would return to the rates we last saw in August 2020, with government funding 80% of usual pay up to a monthly cap of £2,500. The employer would be required to fund all on-costs for employer National Insurance contributions (NICs) and minimum employer pension contributions.
Employees can be furloughed in full, for any period or time, or be required to work for a proportion of their usual hours and be furloughed for the remainder of their usual working hours.
To be eligible, an employee will need to have been on the employer’s PAYE (pay as you earn) scheme as at 30 October and have been in a RTI (real time information) PAYE submission between 20 March 2020 and 30 October 2020.
Claim deadlines
Although claims can be made in advance of paying furlough payments, they must be made by the 14th following the month being claimed. If the 14th is a non-working day, the claim deadline moves to the first available working day. See table.
| Claim for | Submitted by |
| November 2020 | 14 December 2020 |
| December 2020 | 14 January 2021 |
| January 2021 | 15 February 2021 |
| February 2021 | 15 March 2021 |
| March 2021 | 14 April 2021 |
We know from talking to members that this reduced claim deadline has not proved popular. Having a month after the claim period was tight enough for employers that want to ensure their claims are accurate. Reasons received for not being able to claim by the 14th, include:
- complexity of claim calculations
- audit and double checking needed for data and claims
- existing and complex payroll processes and timelines
- limited resources available for payroll and claims processing
- conflict between normal business-as-usual operational issues of a payroll.
This list is not exhaustive.
Along with other stakeholders the CIPP policy team has lobbied HM Revenue & Customs (HMRC) and government in a bid to reconsider the unachievable deadline. Guidance has been updated to allow employers additional time to make claims in the event they make an underclaim.
On Friday 13 November, guidance was updated in recognition of this, with HMRC advising that it “may accept a claim made after the relevant deadline if you had a reasonable excuse for failing to make a claim in time and you then claimed without delay after the excuse no longer applied.”
For claims relating to periods after 1 November 2020, employers are able to increase the amount of their claim if made within 28 calendar days after the month to which the claim relates. If this would fall on a weekend or non-working day, then it moves to the next working day.
Relationship with previous CJRS
Employees on any type of contract can be furloughed, including agency workers and single company directors so long as all eligibility criteria are met.
There are other significant changes. Under the previous CJRS flex rules, a strict limit prevented the employer from claiming for more employees beyond those who had been claimed for under the first phase of the CJRS. This limit has not been carried forward from 1 November; indeed, an employer claiming under the extended rules does not need to have claimed under any previous CJRS, and the employees being claimed for do not have to have been subject to a previous period of furlough.
Claim amounts
For employees who were previously eligible and included in a CJRS claim, the payment claimable is as follows.
Fixed rate employees – The reference period is the last pay period ending on or before 19 March 2020 for employees who either:
- were on the payroll on 19 March 2020 and received a payment of earnings in the tax year 2019/20 which was reported to HMRC in a RTI full payment submission (FPS) on or before 19 March 2020
- the employer made a valid CJRS claim for a claim period ending any time on or before 31 October 2020.
For periods starting from 1 November 2020, the reference period for all other employees is the last pay period ending on or before 30 October 2020.
Variable pay employees – For employees who were on the payroll on 19 March 2020, and who received a payment of earnings during the tax year 2019/20, which was reported to HMRC in a RTI FPS on or before 19 March 2020, the reference pay will use:
- the wages earned in the corresponding calendar period in the tax year 2019/20
- the average wages payable in the tax year 2019/20.
- The same applies for employees for whom there was a valid CJRS claim ending any time on or before 31 October 2020.
Claims for all other employees should be based on 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020.
Recording keeping
As previously, written confirmation needs to be issued to the employee detailing the agreement that has been reached between the employer and employee. This needs to be re-issued with each variant and retained for five years.
Records needed to support the claim, such as hours worked, or hours recorded as furloughed, should be retained for six years.
Annual pay periods
Employees who are paid using an annual pay period will be eligible for CJRS payment where made after 20 March and not later than 30 October and all other eligibility criteria are met.
Director-owned companies are subject to the non-working rules as with any other employee; however, they are permitted to carry out statutory duties as required of their role.
CJRS TUPE
Initially, the information provided suggested that for claim periods after 1 November 2020, a new employer could claim in respect of the employees of a previous business if TUPE (transfer of an undertaking, protection of employment) PAYE business succession rules applied to the change in ownership, and they had transferred on or before 1 September 2020. However, this incorrect information has since been amended.
Employees transferred from their old employer to their new employer on or after 1 September 2020 will be eligible for the scheme. Employees have to have been employed by either their old or new employer on 30 October 2020 and been included in a PAYE RTI submission to HMRC whether by their old or new employer between 20 March 2020 and 30 October 2020.
Notice periods
Claims made for notice periods have always been possible while the employee is serving a period of contractual or statutory notice, and this continues in November. However, from 1 December this is no longer the case so that employees serving a period of notice cannot be included within a CJRS claim.
Employers named
HMRC has advised that it will publish the names and company registration numbers of those employers that are making claims for CJRS grants from 1 December onwards. Could this be in an attempt to reduce the fraudulent claims that have been seen previously as employees will have more visibility of their employer’s actions and could therefore aid HMRC in tackling abuse?
Trick or treat?
It has been a long year, and the profession has battled to keep up with hundreds of iterations of guidance, some of which has been published in advance but with much delivered at the twelfth hour. It would seem likely that this pattern is set to continue as we see the latest iteration of CJRS.
Featured in the December 2020 - January 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.