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COVID-19. Update on the Furlough scheme and business support

The Government has issued further guidance

15 Apr 2020

Further guidance released on 15 April 2020 lists the following.

The main points to be aware of are:

  • To be eligible to claim for the Government grant, organisations must have created and started a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online and have a UK bank account.
  • Employees must have been on the organisation’s payroll on or before 19 March 2020 and have been notified to HMRC via a RTI submission on or before 19 March 2020. This is aimed at capturing more employees within the Scheme. If you had a monthly paid employee join on 1 March and gets paid on 31st March, this employee does not get reported on RTI until 31 March and therefore not eligible. The key date is when the employee was reported on the RTI (and hence HMRC were aware of that employee) not the date when the employee joined.
  • Employees who were on the payroll on 28 February 2020 but then left before 19 March 2020 can also qualify for the Scheme if the organisation re-employs them and puts them on furlough.
  • Under a TUPE transfer, the transferee can claim for employees transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
  • Where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 19 March 2020, the new scheme will be eligible to furlough those employees and claim the grants available under the Scheme.

The Government have announced the following updates to the Coronavirus Job Retention Scheme (CJRS) and various other areas of business support.

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus and commission payments are excluded as are tips and non-cash payments.

If you were made redundant or stopped working for your employer after 28 February 2020, your employer can agree to re-employ you and place you on furlough

Company Directors

Furlough agreements where a company director or member of a Limited Liability Partnership are concerned should be adopted formally as a decision of the company/LLP. Salaried company directors are office holders and therefore eligible to be furloughed. Furloughed directors may carry out particular work in order to fulfil their statutory duties that they owe to their company. They should not carry out work of a kind that would generate commercial revenue or provide services to or on behalf of their company.


Members of LLPs who are designated as employees for tax purposes are eligible to be Furloughed and receive the support through the scheme. The agreement between the member and the LLP may need to be varied to reflect the member will not perform any work during the Furlough period. The salary to be used for this scheme will be the members profit allocation, excluding amounts determined by the member’s performance or the overall performance of the LLP.

Fixed Term Contracts

Employees on fixed term contracts can be furloughed. Their contracts can be extended or renewed during the furlough period without breaking the terms of the scheme. Obviously where the fixed term contract ends because it is not extended or renewed, you will no longer be able to claim the grant for them.

Employees on SSP

Employers are entitled to Furlough employees who are being shielded or off on long-term sick leave. It is possible to claim the grant under CJRS and SSP for the same employee, although not for the same period. Also employees that are shielding may be Furloughed even where there was no plan to make them redundant.

Contractors within IR35

Public sector contractors within IR35 are deemed employees under the off-payroll working rules may be eligible for Furlough and the details of how the claims are to be made has been provided.

Salary Sacrifice

The 80% grant must be wholly paid in money to Furloughed employees and no part of the grant should represent benefits or salary sacrifice.

Employees on Visas

Grants under CJRS do not represent access to public funds and it has been confirmed that employees on all types of visas can be Furloughed.


Employee transfers under TUPE – a new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Groups of Companies

Where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28th February 2020, the new scheme will be eligible to Furlough those employees and claim the grants under the CJRS.

HMRC Testing 

HMRC have launched phase one testing of the 80% Furlough reporting and claim portal with a small number of selected employers. It is their hope that the portal will be open on 20 April for submissions from employers so that the payments will be in time for the end of April. There will be more detailed guidance between now and then.

Self-employed Income Support Scheme

There has been more detailed guidance added to the Self-employed Income Support Scheme. Further details are available here

HMRC Enquiries  

HMRC have indicated that during this lock down period they will be relaxing their approach to taxpayer enquiries by not requesting further documents/information other than those already received and in other cases suspending enquiries.

However, it is sensible for individuals and businesses whose trading activities have been affected by the COVID-19 outbreak, to use this time if they can to respond to HMRC enquiries with a view to obtaining a closure notice.  At least it will be one less thing to worry about for these individuals and businesses as there will be plenty of resource required in the recovery period post lock down.

Audit of CJRS claims 

On the subject of HMRC enquiries and audits, HMRC have indicated that they will audit Coronavirus Job Retention Scheme claims so businesses should have clear evidence of the business impact of COVID-19 leading to their decision to justify to Furlough employees.  If it transpires that the conditions for the Furlough scheme were not met and employers are not able to provide the documents supporting their CJRS claims, they may have to refund the money to HMRC, with interest and penalties – this will not be welcome during a period of recovery for any business/individual.

Statutory Residence Test

There has been a temporary change to the Statutory Residence Test and specifically any period(s) between 1 March and 1 June 2020 spent in the UK by individuals working on COVID-19 related activities, will not count towards the number of days spent in the UK by these individuals when ascertaining UK residence and their UK tax obligations for the year. The duration of this special measure will be kept under review.

If you have any questions on the above please please contact us.

For more information relating to COVID-19, please view our COVID-19. Information Quick Find page

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