COVID-19 Weekly Round Up (w/e 11th April)
Well what a start to a new tax year! Allegedly this is a short week but it feels like one of the longest ever and I know many of you will have been working this weekend (I’m sure HMRC are as they keep telling everyone they are ‘working night and day’ – aren’t we all!).
With so much being published on a daily basis at the minute I’ve started sending a daily Covid-19 update email as well as keeping my resources page as up to date as possible – drop me a message if you’d like to be added to the mailing list. Each week I also intend to dedicate a blog post to a summary of what we’ve seen that week.
Here’s the first one and what you may have missed this week – make sure to check out the Covid-19 page for extra resources too.
On Monday we were treated to updated ACAS guidance on holiday pay. We came to the conclusion that you could have been on holiday last Friday/Monday and furloughed you must top up people’s pay to 100% for those two days if that’s the option you’ve taken, or you could simply add those two days to their holiday entitlement when they come off furlough given that holiday can now be carried forward.
On Tuesday night, HMRC made a policy announcement to the EPG (their main consultation group for payroll matters) – this is not confidential as it was confirmed by Jim Harra to MPs on parliament TV on Wednesday – about those people who had a start date in February but were not reported until the March FPS, even though the Coronavirus Job Retention Scheme (CJRS) guidance on three occasions now simply says ‘being on payroll on the 28th February’. Apparently HMRC’s view of that means being reported in February. This is a major difference in understanding for businesses of all sizes who have made decisions on the basis of the inclusion of everybody who had a start date on, or before, the 28th February, but who now appear to find that some of their February starters may not be included in the reclaim scheme. I know that the members of the EPG who are also members of ICAEW and CIOT have expressed their concern about this policy change, we will have to see where this goes.
Here are the main points from MPs question time with Jim Harra:
- It became clear that weekly pay frequencies will have to make a weekly reclaim, which is not what the guidance has said so far (it talked about a claim every three weeks), presumably forgetting that not everybody was paid monthly. It was also announced that anybody making fraudulent claims would face criminal action (but I’m not sure if this would be under the Proceeds of Crime act?)
- Policy Design – Jim Harra explained that the policy had been built with four lines of defence: 1) Employees required to be on payroll on 28th February 2020, 2) Authentic credentials as an employer on the system to claim, checking payments during payment processing, 3) A reporting hotline, for anyone to use where there are questions over employers abusing the systems, 4) Audit/checking/Risk Assessing
- New Starters after 28th February – Almost every member of the committee raised the question of new starters on payroll after the 28th Feb. HRMC described a cut-off is needed as is key in the lines of defence against fraud. They recognised that some employees would be disadvantaged by this and highlighted that there are other schemes in operation that could be relied upon e.g. Universal Credit. Cerys McDonald followed this up by stating that there would always be trade-offs when designing both policy and operational processes at the speed that HMRC have worked at
- Systems and Process – HMRC’s target is to have the portal up and running by 20th April 2020. They believe that they are currently on track to meet this deadline. The portal has been created and is in testing with some select employers. Following testing it will go through iterations to ensure it is robust. Their commitment is to be making payments to businesses by 30th April 2020. Once a claim has been received, HMRC will process the claim with money reaching the business’s bank account between 4-6 working days.
- Claiming – Employers must calculate the value of the claim – HMRC do not do this.They’ll need to already be registered and authenticated with HMRC to file PAYE claims. It’s one claim for any pay period and a claim for each pay period, rather than each month. Employers can make a claim up to 14 days BEFORE payroll is run. Businesses can claim the grant, get the grant and then run payroll.
- Can HMRC cope? – The system is being built to process 450,000 claims per hour and 5,500 staff are available to support businesses. The expectation is that most businesses will file claims themselves without needing to contact HMRC. There will be guidance issued on the process.and how to claim. They are expecting the vast majority of employers to process their claims within the first 48 hours of the system going live, so have designed the system with this in mind
- As the week progressed we realised that the ePAYE reference guidance from 26th March refers to the fact that HMRC are bolting the reclaim onto PAYE online/the business tax account, as they say you need to be registered for PAYE online as well as have a UK bank account and a PAYE scheme reference. This is a big issue for those with outsourced payrolls, as very few of them have ever registered for PAYE online. As this is their decision, we need agents to get all clients to register for PAYE online. It appears that activation codes will now be sent out by email. We’re still unclear if 64-8 authorisation is enough for an agent who wants to do the reclaim for a client.
On Wednesday the reclaim portal went into testing and will be open on the 20th April. The email announcement also indicated that we will need a national insurance number and employee number for every person on the claim which is not in line with the guidance as it talked about a bulk claim. Of course we expected to have detailed evidence to justify the claim but: a) not everybody has a national insurance number (which is perfectly valid as you don’t need one to be on payroll) and b) are we going to be able to upload CSV files or the like?
I’ve also been trying to get to the bottom of what agents will actually be able to do on behalf of clients. This from the agent guru at ICAEW:
“It is HMRC’s clearly stated intention (on a call with them yesterday) that agents will be able to make CJRS applications on behalf of clients. File-only agents with no authority are excluded. We are still trying to get to the bottom of the different forms of authority – 64-8, FBI2 and online – to check which of these will allow applications.”
The updated CJRS government guidance on 9th April confirmed that if you’re TUPE’d by the 28th February, you can still be furloughed by the new employer. It also became clear that if you do a basic earnings assessment for somebody who is furloughed, they could well end up with more tax relief for childcare vouchers than they would normally have done – it’s good to see something working in people’s favour when their salary has dropped.
Guidance on statutory parental bereavement pay and leave was published. I use the word ‘guidance’ in a very loose term because after nearly 2 years of development it is very poor. Advanced funding seems to be a completely different mechanism to all other statutory payments, and the exclusion form is online only which will be of no use to employers or agents whatsoever. The declaration for employees is also online only. The guidance is here. You can access the claim form here, the calculator here and entitlement tables here.
We were told that there would be an official statement from HMRC to back up this commentary on company cars:
“A car kept on an employee’s driveway during a period of furlough would still be considered to be made available. Neither would we accept a SORN declaration as proof of unavailability. Ordinarily, we would expect that the car is handed back to the employer so that it cannot be used. However, we recognise that under the current circumstances it may not be possible to hand the car itself back, we would accept that where all the keys (or tabs) are in possession of the employer, and the employee does not have the authority to request the keys are returned to them, the car would be unavailable.”
On that front the company car calculator for 2020/21 has at last been updated.
Lots of reservists have been called up. Here’s the published guidance on pay and benefits, financial support for employers and the ability to decline a call up for key workers.
On a separate note, HMRC announced to software developers that public sector employers must use the new off-Payroll worker marker from the start of this tax year to designate their deemed employees.
We also had new guidance on pension contributions from the pensions regulator.
With all this going on, it might have slipped your mind (although I’m sure agents haven’t forgotten) that we needed an exchange rate as of the 30th March 2020 to convert de minimis state aid from sterling into Euros. There was no exchange rate published on the appropriate day so I asked HMRC and that has now been confirmed as follows:
“Our Policy team have confirmed that the employers should use the exchange rate for 30 March 2020 which is £1 to €1.1249, they’re working with the web publishing team to get the incorrect guidance updated on GOV.UK.”
Can I make a plea that we are really careful about using the correct payment date in our FPSs (particularly as dates might be moving due to cash flow issues) as that date in field 43 MUST be the payment date that has been contractually agreed as the employee. This dictates when data is passed to DWP for universal credit and we will have hundreds of thousands of more people on universal credit now.
That’s this week’s round up! Don’t forget to check out the other resources shared this week on the Covid-19 page. Noticed something not on there? Please do get in touch! It would be great for this to be as helpful as possible.
Deep breaths and into next week we go!