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What we know webinar: the furlough scheme

17 April 2020: ICAEW’s Tax Faculty presented a webinar outlining the latest on the Coronavirus Job Retention Scheme, which included details on the new cut-off date, furloughing for directors and the information needed before submitting a claim. Rachel Underhill, Senior Business Strategy Manager at ICAEW, reports.

The government’s Coronavirus Job Retention Scheme is the single most-searched-for topic on ICAEW’s website at the moment. In the second instalment of ICAEW’s COVID-19 “what we know” series, ICAEW’s Tax Faculty outlined the latest on the furlough scheme – including a breaking announcement.

The Tax Faculty’s Anita Monteith and Caroline Miskin presented the webinar and had to adjust their plans with minutes to spare as the government announced a new cut-off date for access to the scheme, pushing the qualifying date for the grant from 28 February to 19 March. Since the webinar was recorded, HMRC has updated its guidance and published a Direction (a form of legislation), but we expect further changes may still be forthcoming.

Monteith strongly recommended that people should keep records and an audit trail. Now is the time to remember your training: keeping track will be important for looking back on this time and help to recall why you made certain decisions should the boundaries change. The panel urged viewers to adopt a pragmatic, common-sense-based approach.

Miskin then went on to explain that the furlough scheme is split into two very separate transactions and calculations. The employer-to-employee transaction will be as per the amended contract, with employment law rules and rights still holding true. The transaction between HMRC and employer is completely separate: it is a grant, but it is not a straight reimbursement of the payment to the employee. Minimum wage rules do not apply to those on furlough except for those undertaking training.

The webinar continued to explore who is eligible – all types of contract, foreign nationals and those transferred under TUPE, for example – along with minimum periods of furlough. It also looked at what employees can do while furloughed such as training, and volunteer work for unconnected businesses. Statutory Sick Pay and the treatment of holidays and bank holidays was also discussed in more detail.

Directors who furloughed themselves were also considered, given that ‘what constitutes work for a director?’ is such a commonly asked question. What is clear is that there are still several grey areas. Again, panellists urged viewers to adopt a pragmatic approach and stated that the Tax Faculty will continue to raise these grey areas with HMRC based on the insights of ICAEW members.

Monteith went through numerical examples and explored the difference between wage and salary, and those on variable pay. Queries on overtime, salary sacrifices and payrolled benefits were also discussed, along with what it meant to be “on the payroll”.

How to claim – the biggest question on everyone’s lips – was explored, with a cautionary note that there will be work needed before the upload. For those who have not done so already, they are urged to prepare this information as soon as possible:

  • Employer PAYE reference number
  • Number of employees being furloughed, which will dictate the level of detail and upload
  • Names, national insurance numbers, works numbers for furloughed employees
  • SA UTR or CT UTR or Company Registration Number
  • Claim period (start and end date)
  • Amount claimed
  • Bank account number and sort code
  • Contact name and phone number

It was noted that some details from the above may not be possible to gather, such as national insurance numbers or UTR. This has been raised with HMRC as a matter of urgency.

While the webinar aimed to provide as much practical help as possible, it is clear that there are grey areas, and these have been raised directly with HMRC as Tax Faculty has become aware of them.

For those looking for more information and to give insight after listening to the webinar, ICAEW would encourage: