Coronavirus Questions Answered
As my regular readers will know, over the last three months, I have posted a series of Blogs on the effects of the coronavirus on businesses and individuals. As a result, I have received quite a few emails on the various issues raised but recently two topics have dominated my mailbox: the changes to the furlough scheme (CJRS) and the extension of the self-employed support scheme (SEISS).
So, I have selected half a dozen of them, which I hope you will find interesting or personally relevant:
- (CJRS) How do you calculate the usual hours for a director?
- (SEISS) Will HMRC contact me directly re the extension to the self-employed scheme?
- (CJRS) How does part-time working affect a furlough claim?
- (SEISS) What do I declare on my next Tax Return?
- (CJRS) Are there any provisions for employees who’ve started after March 19th?
- (SEISS) What happens after October 31st?
1. (CJRS) How do you calculate the usual hours for a director?
I’m the bookkeeper for a small business with 14 employees, including two directors. When preparing the furlough claim, what do I put down for the usual hours for the directors as they are not on the timesheets?
Answer
I genuinely have no idea as directors are generally not required to record their hours! My instinct is to go by days, but unfortunately, HMRC has not provided much if any guidance for directors. It’s such a big gap, and HMRC have designed the portal to be the same way as the calculation, so if you can’t key in hours, you can’t make a claim.
Luckily, if the director is entitled to full furlough pay hours are not an issue, anything else and you potentially have a big problem. My advice is to put the directors’ hours down as the same as the standard working hours for the rest of the staff; assuming of course, that the directors do work at least those hours.
2. (SEISS) Will HMRC contact me directly re the extension to the self-employed scheme?
HMRC contacted me directly regarding my eligibility for the original scheme, but will they do so for the extension to the self-employed scheme as I understand that they’ve made a few changes to version 2 and I don’t want to miss out?
Answer
I fully expect HMRC to be in touch with anyone they contacted the first time round. The eligibility test is exactly the same, and you can sign up to be notified when the portal opens, and any changes to the guidance will be shown in the accompanying notes. Also, if your business wasn’t affected in the first claim but is now, you can make your version two claim independent of whether you claimed for version one.
3. (CJRS) How does part-time working affect a furlough claim?
I run a small engineering works with 20 employees and plan to gradually re-open starting in early July but because my workers have been off for three months, I need to bring them in gradually for a couple of days a week for refresher training. How will this work regarding my next claim?
Answer
From July 1st, you can bring back furloughed workers on a part-time or reduced-hours basis while still claiming from the job retention scheme for the hours the employee isn’t working. For example, if a worker is brought back for two days a week, the employer will pay these two days in full as usual. Then continue to claim 80 per cent of the employee’s wage cost through the furlough scheme for the other three days.
4. (SEISS) What do I declare on my next Tax Return?
I received a SEISS grant a few weeks ago, and as I’m in a vulnerable group and still not able to work, I will be claiming for a grant in the second wave. My Question is; on my Tax Return for the year ended April 5th 2020, what do I show as grant income as the payment from HMRC last month included two weeks of the previous tax year?
Answer
Please do not concern yourself. I have already spoken with a senior tax inspector who has told me that, unofficially, HMRC will be ignoring this anomaly and will expect all SEISS grant income to be declared on the 2020/21 Tax Return.
5. (CJRS) Are there any provisions for employees who’ve started after March 19th?
In early March, I took on a new employee (Eric), gave him a contract of employment and agreed on a start date of April 1st. He gave notice to his then employers but unfortunately, we were both overtaken by events. I know that I could not furlough him initially, but can I do so now under part two of the scheme?
Answer
To reduce fraudulent claims, the job retention scheme included a cut-off date of March 19th, after which employees starting at a company were not eligible. Unfortunately, this still left many employees in the lurch including Eric. To Rishi Sunak’s shame, the rules are just as unfair second time around.
6. (SEISS) What happens after October 31st?
I run a restaurant business and am currently closed. The latest relaxation in the rules will help somewhat but when I’m allowed to re-open, presumably in July, the reduction in restaurant covers necessary to comply with the rules, will make my business unviable. Is there anything available going forward once the SEISS grants finish?
Answer
David Jones Tax Accountant
Bad news I’m afraid, the Chancellor has made it crystal clear that the scheme will not be extended beyond October 31st 2020. When the self-employed grant scheme was originally brought in, it was to be for the three months, and that was supposed to be it. But as we both know, because of the ongoing problems caused by the coronavirus, he changed his mind and extended the scheme; so it is just possible that he may do so once more.
If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.