[Guidance is changing quickly and this was correct at time of posting]
The details about how the Coronavirus Job Creation Scheme will work from 1 July 2020 were released on 12 June 2020.
As a result, the number of documents that make up the guidance has increased.
We still have some of the previous line up which have been updated:
Check if you can claim
Check which employees can be put on furlough
Claim for your employees’ wages
Reporting employees' wages to HMRC
However, there are new documents that represent a re-titling and re-writing of other documents. I will not trace the moves here. Suffice to say, use these new documents from now on:
Steps to take before calculating your claim
Calculate how much you should claim
We also have worked examples to which the above refer. The first is a single case whereas the second looks at various scenarios:
All of the above cross-reference with each other in weird and wonderful ways.
Finally, there is the guidance for employees which, if you look closely, appears to be conflicted as to whether it was updated on 12 June, but it does appear to be the case:
With so much material to cover it is only possible here to provide an introduction to the changes. When it comes to the mechanics of working out the claims from 1 July onwards, reference will have to be made to the worked examples as there are variety of issues to address and the figures will change in each subsequent month, as the limit on what can be claimed is reduced.
Claims will have to tackle each month separately. For most employers making separate claims for June and July should, on the face of it, not present much of a problem. There is also the added comfort that you can make claims for the period up to 30 June until the end of July. However, claims for 1 July onwards can only be made from that date.
Employers can still make claims in advance, but no more than 14 days before the end of a claim period, thus avoiding having to wait until the end of the month. Having said that, the flexible element that is being introduced does mean you have to be sure of that you calculate the number of hours being worked. Incorrect claims will require some of the grant to be repaid.
As part of the move to be more flexible the minimum three-week period for an employee to be on furlough has been removed for flexible furlough starting after 1 July.
While there is no minimum period any claim submitted to the portal must cover a minimum period of one week. This may cause a difficulty where a period of furlough straddles the end of one month and the beginning of another but the guidance points to an allowance being made for this. Hopefully, the portal will be clear on this point bearing in mind the need to only deal with one month at a time.
The restrictions on the three-week minimum period only lifted for from 1 July. Where an employee starts a new furlough period before 1 July this furlough period must be for a minimum of three consecutive weeks.
While flexibility is wonderful in theory it does make calculations more complicated, especially where the normal hours of work vary from employee to employee (eg 25, 30, 35, 37.5 or 40 hours per month). Assessments will have to be made on what sort of part-time work is available and the maths that result will have to be checked very thoroughly.
As before, employers will have to keep records relating to any claims for a period of six years. The extent of the records has now grown. HMRC will expect to see that employers have made the calculations correctly when claiming as one would expect. The added element will be keeping accurate records of the hours worked and not worked; not forgetting the initial basis for arriving at the normal number of hours that formed the basis for the calculation.
For those on a fixed salary, the reference period for hours is the pay period before 19 March 2020. For those on variable hours an employer must look at the higher of the following:
1 – the average number of hours worked in the tax year 2019/20; or
2 – the corresponding month in the tax year 2019/20.
Remember, if someone has not been placed on furlough for the first time by now they will not qualify, unless returning from family-related statutory leave. Also, until the system of flexibility comes into operation on 1 July those on furlough should not undertake any work. Even after that date they should undertake no work for an employer during the hours they are deemed not to be working (ie for the portion of time for which a claim is made).
Finally, the number of employees you can claim for in any claim period starting from 1 July cannot exceed the maximum number of employees and employer claimed for under any claim ending by 30 June 2020 (excluding those coming back from family-related statutory leave). Where there has been some sort of rotation this may cause some problems for some employers.
[There is a further update to this post, click here]