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Are Sage Payroll CJRS Module calculations flawed?

Has the Sage CJRS module calculated your furlough claim for variable pay employees correctly?

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Despite contacting Sage Support on Friday 24 Apr for an explanation as to why their Coronavirus Job Retention Scheme module was giving me incorrect figures for variable pay employees, the only explanation I have received to date is that "HMRC have approved our calculations".  Despite escalating the query within Sage and being promised on more than one occasion that "a call is being arranged for you from one of our product specialists", no such call has been forthcoming. This is not good enough.  It is not acceptable for Sage to try and pass the buck and blame HMRC.  They have a duty to ensure that their module is producing calculations that accord with Government guidelines, irrespective of whether HMRC have approved it or not.

One of my clients had two employees, furloughed from 1 Apr to 30 Apr, with differing amounts of variable pay (all eligible for furlough). The CJRS module calculated their "100% Earnings" correctly, but then said that their "Furloughed Earnings" were 82.1% of this figure, despite all their earnings being eligible for furlough!  The resulting "80% Furlough" claim was actually only 65.7% (being 80% of 82.1% instead of 100%).  Yes there are potential differences because the module calculates on a tax monthly basis using calendar days, but those differences are nowhere near sufficient to explain to my clients why the Furlough claim I have submitted on their behalf is 17.9% less than it should be.

We rely on Sage to get the calculations right.  If there is a problem with the CJRS calculations, it needs to publicised and fixed urgently.  HMRC are under intense pressure to handle all the measures that the Chancellor has introduced to support businesses through this crisis.  We do not want that pressure to be increased because thousands of us have submitted incorrect CJRS claims that need to amended because we relied on a module that may be fundamentally flawed.  It's time that heads were extracted out of the sand.  Answers need to be provided.  We need to know what's going wrong.

If you have used the Sage Coronavirus Job Retention Scheme module for employees with variable pay, furloughed for a calendar month, my advice would be to check your calculations manually before you submit a claim.  If you encounter similar problems to me, it would be helpful to know.        

Replies (27)

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By paul.benny
29th Apr 2020 10:56

To be fair to Sage and any other payroll provider, they've only had four weeks from initial announcement of the scheme to delivery of the software solution. The initial guidance wasn't completely clear and comprehensive - look how many questions were raised here. So to have any calculation tool at all is a pretty good achievement.

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By TheOneAndOnlyNorthEnd
29th Apr 2020 11:21

Don't dispute the time pressure Paul, but having a calculation tool that provides the wrong answer is worse than having no tool at all.

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By paul.benny
29th Apr 2020 14:25

Agree.

Given the complexities and ambiguities, I think I would have chosen to do the calculation myself rather than relying on a software tool - as you have evidently had to do.

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By Cheshire
29th Apr 2020 14:31

Agree. I thought most of us did this as a matter of course normally, rather than relying on software, eg for SA and CT, although sometimes when under such pressure we can lose our heads if we are not careful.

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By lionofludesch
29th Apr 2020 11:52

Without numbers, it's hard to say.

There are caps and apportionments - some of them arcane - which may apply.

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By TheOneAndOnlyNorthEnd
29th Apr 2020 13:01

Understand Lion. Caps do not apply as all amounts < £2,500. The actual figures were:

Employee 1:
Apr 19 Pay £953.40
May 19 Pay £634.20
2019-20 Pay £9,013.20
Employee 2:
Apr 19 Pay £634.20
May 19 Pay £793.23
2019-20 Pay £10,003.74

My calculations based on calendar months give:
Employee 1 £953.40 @ 80% = £762.72
Employee 2 £883.65 @ 80% = £706.92

My calculations based on tax months (to see if I can agree Sage figures) give
Employee 1 £896.79 @ 80% = £717.43
Employee 2 £864.32 @ 80% = £691.45

Sage module gave me:
Employee 1 £783.10 @ 80% = £626.48
Employee 2 £725.81 @ 80% = £580.65

Can anyone explain?

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By TheOneAndOnlyNorthEnd
29th Apr 2020 13:05

Apologies. Employee 2 Apr 19 pay was £883.65

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By Wanderer
29th Apr 2020 13:13

What are the reasons for the pay varying?
Sage have made a sweeping statement that "Fees, commission and bonuses must not be included." which some of us have questioned here:-
https://www.accountingweb.co.uk/any-answers/cjrs-which-calculation-method

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By TheOneAndOnlyNorthEnd
29th Apr 2020 13:38

Reason for the pay varying is the number of hours worked. In effect they are zero hours contract staff. Those other issues are red herrings in this instance.

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By Wanderer
29th Apr 2020 13:42

Okay, see my 29th Apr 2020 13:23 post.

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By lionofludesch
29th Apr 2020 13:23

You miss out a vital bit of information - pay to the last pay day prior to 19 March.

Is April pay 1/11 (or more properly, 30/335) of the first 11 months' pay of 2019/20 ?

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By Wanderer
29th Apr 2020 13:25

lionofludesch wrote:

You miss out a vital bit of information - pay to the last pay day prior to 19 March.

Don't think that's relevant Lion, don't think these are 'Fixed rate employees'.
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By lionofludesch
29th Apr 2020 13:38

Wanderer wrote:

lionofludesch wrote:

You miss out a vital bit of information - pay to the last pay day prior to 19 March.

Don't think that's relevant Lion, don't think these are 'Fixed rate employees'.

Neither do I.

Higher of average pay since 6th April and corresponding pay for 2019 ?

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By Wanderer
29th Apr 2020 13:40

Yep!

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Replying to TheOneAndOnlyNorthEnd:
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By Wanderer
29th Apr 2020 13:23

TheOneAndOnlyNorthEnd wrote:

My calculations based on calendar months give:
Employee 1 £953.40 @ 80% = £762.72
Employee 2 £883.65 @ 80% = £706.92

I can get to these figures using my calculator here (calculator uses daily basis) :-
https://www.accountingweb.co.uk/any-answers/furlough-cjrs-claims-are-peo...
You appear to have overlooked the fact that they were furloughed on 1 April. If you put the end date of the basis period into my calculator of 05/04/2020 then it comes back to your figures.
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By TheOneAndOnlyNorthEnd
29th Apr 2020 13:52

Thanks Wanderer. I haven't overlooked the fact that they were furloughed on 1 April, but I had got the tax monthly calculation wrong. I should have been using 5/31 of the Mar 19 pay and 25/30 of the Apr 19 pay, not 25/30 of the Apr 19 pay and 5/31 of the May 19 pay.

Their March 19 pay was:
Employee 1 £676.50
Employee 2 £682.95

My revised tax monthly figures are:

Employee 1 £903.61 @ 80 % = £722.89
Employee 2 £846.53 @ 80% = £677.22

That is still massively different from the figures calculated by the module.
As you say the earnings at 19 Mar 20 were not relevant as they are variable pay employees.

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By Wanderer
29th Apr 2020 13:56

Okay, not going to work through your revised figures as I've already agreed your calculations. Download my spreadsheet and play with that. It CAN get to your figures as I've mentioned above.

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By TheOneAndOnlyNorthEnd
29th Apr 2020 14:31

Excellent model and thanks for all the work that has gone into it. I see what you mean about the 1 Apr 20 - 5 Apr 20 period, but I think it would be unfair to marginally increase the average gross pay for 2019-20 accordingly. After all their actual 2019-20 pay was for a 366 day year.

I'm glad you agree my figures. The bottom line is that after 276 page views and counting, no-one has managed to explain the figures being produced by the CJRS module and Sage have still not called me as promised.

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By Wanderer
29th Apr 2020 15:11

You think fairness comes into it??
Ask all those directors with annual PAYE schemes!

Understand why you wouldn't want to increase the average although there are multiple scenarios when that average is decreased. My model just (attempts?) to apply the rules as written. Obviously a judgement call to adjust for when the claim is made, and 7.2(a) does allow some variation when it says "the average monthly (or daily or other appropriate pro-rata) amount".

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By lionofludesch
29th Apr 2020 15:25

Wanderer wrote:

You think fairness comes into it??
Ask all those directors with annual PAYE schemes!

Yeah, but, to be fair, annual schemes were always asking for trouble, weren't they?

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Replying to TheOneAndOnlyNorthEnd:
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By redgirl24
29th Apr 2020 18:03

Looking at Sage's blurb I think the calculator has done this:-
953.40 x 12 = 11440.80 / 365.2425 = 31.323846
5 x 31.323846 = 156.61923 (5 days of M12)
25 x 31.323846 = 783.09615 (25 days of M1)
Total 939.71538 x 80% = 751.77

Although looking again at what they've given you, it seems they've only counted 25 days

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By lionofludesch
29th Apr 2020 18:06

redgirl24 wrote:

953.40 x 12 = 11440.80 / 365.2425 = 31.323846

365.2425 ?

So over a 400 year calendar cycle.

Jeez !! Talk about spurious accuracy !

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By redgirl24
29th Apr 2020 18:38

I was only going off the info in Sage article 46473 in an attempt to answer TheOneAndOnlyNorthEnd's query as to how it may have been calculated! I would certainly not do any payroll calcs based on 365.2425 days but that's what they appear to have done:-

"Monthly employees
If the pay frequency is monthly then the furloughed earnings are:
Earnings in step 1 multiplied by 12. Divide this value by 365.2425 then multiply by the amount of furloughed days."

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By TheOneAndOnlyNorthEnd
29th Apr 2020 19:57

Redgirl you are a star!!! Mystery solved. The CJRS Module calculations ARE flawed! Sage please note. Your module is wrong. Because you are using tax months, your calculations for a calendar monthly claim, exclude the last five days of the overlapping tax month. This is wrong. I have no idea how many claims have been submitted based on your erroneous calculations but HMRC please enable us to amend claims already submitted as soon as possible. Sage please fix your software urgently.

For those interested (if any!), despite receiving another assurance that I would receive that support call today, and despite me staying in my office to receive it until 6pm, surprise surprise...it never arrived!

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By Paul Morgan
29th Apr 2020 15:31

Hi,

I’m sorry that you didn’t receive a call back on this, I’ve chased this up for you to be done this afternoon.

In the meantime I recommend that you refer to our guide which explains the calculations made by our Job Retention Scheme Module and the cause of any differences between these calculations and HMRC's. You can access this here http://ow.ly/1eME50zrUjT

Regards,

Paul
Sage UKI

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By Paul Morgan
06th May 2020 09:08

Hi all,

Just a quick post to provide an update on our Job Retention Scheme module in Sage 50cloud Payroll.

We're constantly working on improving the module to make the claim process as easy as possible. We've updated the module and made improvements based on updated guidance and customer feedback. This includes changes to:

 How the module calculates claim amounts for part furloughed employees. The calculations are made using the same method as HMRC.
 How the daily rate is calculated.
 Enable the ability to process top up pay.
 Improve the user interface to make processing easier.

You can access our guide to using our Job Retention Scheme module here http://ow.ly/oHtr50zycSo

Regards,

Paul
Sage UKI

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By SallyS1000
14th May 2020 13:48

A big thank you to everyone who has taken the time & trouble to post about the problems with Sage CJRS module. I thought I was going mad. I sent our firm's CJRS claim to HMRC before Sage released their module. When it was released I thought I would check our claim. The report I produced in the module did not match any of my calculations. I was very concerned! I immediately did a check by using HMRCs own calculator. My manual calculation and HMRC calculation was different by just 18pence. So I looked at the Sage report again, to see where the differences were. The Sage report produced in this module does not make any sense. Employees on furlough will expect to get 80% of their usual basic salary, not a figure less than this. Also the ER NI column had negative amounts in. Why doesn't Sage use the NI figures it has calculated in the actual payroll process? I will be using the HMRC calculator to check my claim for all future claims. I think Sage should print a warning that their calculations are based on a different method and even though they had little time to develop this module, a report with obviously incorrect figures is no use what so ever. I can see that many employees will query why their furlough pay is less than they thought it would be . The 80% figure is widely published.

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