Monday 30 March 2020 Update

Monday 30 March 2020

In the space of a weekend two main issues have become frontrunners for topics to address for clients this week’s email. In the same few days it’s been heartening to see three quarters of a million people step up to help others by volunteering to support the NHS.

The topics that most clients are contacting us about are:

  • Directors of Limited companies on basic pay and furloughing themselves, and
  • Bank support through the Coronavirus Business Interruption Loan (CBILS)

In this Monday afternoon update I will focus on one of these, furloughing.

Like all of you I have been deeply affected by this pandemic and I am struggling to find the time to work out the likely impact on this firm.  Mostons have not furloughed any of our team, nor do I believe that we can do so, whilst so much is demanded from us.  We remain fully functioning.

Furloughing staff and applying to your bank for Coronavirus Business Interruption Loans are two measures designed to financially support jobs and businesses in this difficult time.

If Mostons were to reach out to our bank for loan support, I certainly would not have the time to evaluate and predict the future, to the extent that our clients are being asked to do, in support of Government back loans.  I will write on this later this week.

Furlough

There are so many questions around furloughing I will not try to be the oracle on this topic.  If you Google this word, there are 23.3 million hits.

Look at The Government website

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

HMRC are working on their portal to enable business to register their staff that have been sent home and are unavailable to work.  This support is primarily for job retention measure and then financial support of businesses that are running out of working capital.

At Mostons, we can assist with the administration of the claim, if required, once this is available and we can access HMRC’s portal.  Key points arising from my reading on this topic is that you must communicate with your staff that have been furloughed and explain to them the terms of this temporary lay-off.

The most frequently asked question from Company Directors though is “what about me?”.  Initially there was little to suggest that this included the bosses, however, if you were an employee on the payroll (up to February 20) then you can be included.  Dividend payments are excluded.

The Government will pay 80% of the salary cost (Gross pay) up to £2,500 per month,  for an initial three months from 1 March.  (This may be extended if necessary).  It is worth noting that employers can top up salaries if they wish. The additional cost of Employers National Insurance and basic pension contributions into Auto enrolment will be addressed as a separate claim.  HMRC to advise

Where pay varies then you can use an average of pay through the 2019/20 tax year or the same month from last year.

In preparation for making a claim here are the items you will need to have ready:

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number
  • the amount you are claiming.

HMRC will retain the right to retrospectively audit all aspects of your claim.

Finally, on a lighter note, a furlough should not be confused with a Furlong. Paul Furlong is a retired professional footballer who is currently a coach for Queens Park Rangers.  One of my favourite Watford strikers, 37 goals from 79 games.

Stay well.  Look after yourselves and keep in touch.

 

Best wishes.