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Update for Our Payroll Clients

We are conscious that from the many queries received by our Partners, Managers and payroll staff, understandably the Job Retention Scheme has become a key factor for many of our clients in implementing measures to deal with the very significant affects of the lock down provisions in the fight against the Coronavirus. I therefore thought it was worth a summary as to how we are dealing with this area for you, and how we would work with you in order to ensure we can together manage your claims under the Job Retention Scheme.

At the moment as you will hopefully be aware from previous updates, we are at the point of waiting for HMRC to set up the portal system to be used for the submission of claims. HMRC have stated “We expect it [the online service] to be available by the end of April”, and so there is some time before we are in a position where claims can be submitted and therefore the details as to how the submissions through the portal are dealt with is fully clarified.

Given no details on the portal have been released yet, we do not yet know whether we can log in to this portal as agents, or whether the login is only via the individual businesses Government Gateway. Once this is clear, we can communicate with you on how we can either undertake the claims submissions on your behalf, or support you with the submissions.

It is worth at this point, however, being mindful of the information stated as required for the claim, which is:

• 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 above is fully available from information contained in the payroll reports. Note also, though, that the Employers National Insurance and minimum Auto Enrolment employer pension contributions on the furloughed pay should form part of the amount to be claimed, and so this will need to form part of the calculation of the amount to be claimed in addition to the staff’s pay. This does mean that there needs to be an extraction of and collation of wage amounts, employers NI and pension contributions to combine these into the overall claim amount.

From a practical point of view it makes sense to ensure the information is being summarised and collated on an ongoing basis as the pay details for the payroll are prepared and run rather than needing to collate information retrospectively when a claim wants to be made.

To assist you with this, when we are running your payroll, we are ensuring we identify furloughed workers pay separately from staff pay where they are not furloughed on payslips and on reports to ensure it makes the amount of furlough pay easier to identify, and also if necessary splitting the 80% furlough pay to be claimed from the additional 20% topped up by the business if the full 100% of pay is being paid rather than just the 80% which can be reclaimed.

The payroll will be run to include the actual amount being paid to the employee, whether that is 80% of original wage or 100%. This will then enable the bank payment file to reflect the correct amount to be paid to the staff member.

To help us to assist with information required to be submitted on the portal, we would therefore ask all clients to provide us with the following when supplying the payroll information:

• identity of staff furloughed and those not furloughed. Note that this should include notification as to whether Director/owners are furloughed
• period over which the staff member has been furloughed between the last payroll period and the current payroll period. Note this has to be for a minimum of 3 consecutive weeks for employees to be classed as furloughed
• for furloughed staff, whether only 80% of salary is being paid by the company, and if so what that 80% amount is, or what the 80% of hours is if calculated that way
• for any staff who receive variable pay, whether you require us to assess the potential claim based on the basis of calculation of:
o the same month’s earning from the previous year
o average monthly earnings from the 2019-20 tax year

We are ready to support with the additional requirement to summarise information and calculations, and the submission of claims, which is obviously outside of the normal payroll processing work. As stated above, we will confirm and agree with you how the claim can be submitted once we have further details on the HMRC portal. Whilst claims can be submitted every 3 weeks, capturing both weekly and monthly pay period seems the most appropriate practical approach to the claims, and so we will be collating information on a monthly basis for a monthly claim to fit in with a full payroll month.

All clients should be conscious of the requirement for a staff member to be furloughed for a minimum of 3 weeks as stated above. Staff being furloughed can be rotated, and so it is important to ensure you are recording which staff are furloughed and for what period if staff are not furloughed for a full payroll period. As detailed above, this will be a key part of the information we will need off you.

Clearly there may be nuances relevant to different companies and different payroll requirements. We have been dealing with many queries with regard to this on an ongoing basis. However, if you do still have queries you are not sure of, please get in contact with us now. It will be easier for everyone if we can confirm any uncertainties and what we need off you at this point if you are not sure, rather than this being left to when the payroll is being run and there is the time pressure of the payroll run deadline to meet.

Please do get in touch with us to discuss the above further as required.

Andrew Baggott
Managing Partner

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.