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CJRS2 - Directors' Furlough - Flexible Hours

Calculating and Applying the "Usual Hours"

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There appears to be little on Aweb recently re CJRS2 and Directors’ usual hours.
As I haven’t taken the plunge, this is what I have gleaned so far from mean pickings across the web:

  • HMRC have not issued guidance
  • Directors should keep records of actual hours and the CJRS2 calculations
  • CJRS1 must have been claimed
  • Include statutory duties in actual hours

From Accountancy Age:
“employers are advised to resist the urge to follow their gut instinct ... any directors claiming under the mark two scheme for flexible furlough should keep good evidence of the work that they are doing, the hours that they are actually working and how they determined their usual hours.”

From ATT:
“We have requested further detailed guidance on how flexible furloughing will work for company directors from 1 July 2020 but have been advised that no further guidance for company directors will be provided and that members should use their own judgement.”

From Burges Salmon:
“For employees with variable hours, their ‘usual hours’ will be the higher of either the average number of hours worked in the tax year 2019/2020 or the corresponding calendar period in the tax year 2019/2020” [citation not traced]

The latter is interesting as it addresses an issue I was researching. Ltd Co (1 Dir/Sh) client in service sector had fluctuating fortunes in 2019/20: July good, August bad.

In 2020, getting going again after full furlough CJRS1: July a bit of work, August looking even better and better than August 2019.

So for CJRS2 July 2020 actual hours: 40.
July 2019 actual hours: 120 (and higher than the 2019/20 average), so 120 becomes the “usual hours”, so 80 furlough hours, so claim 80/120 of February 2020 salary (per HMRC calculator for Jul & Aug).

CJRS2 August 2020 actual hours projected: 80.
Aug 2019 actual hours: 40, so 40 becomes the usual hours to be consistent, so no claim – the HMRC calculator rejects this.

Then you have to tell the client to approve the claim.

Replies (5)

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By Wanderer
10th Aug 2020 18:57

Gone Sailing wrote: 40 becomes the usual hours to be consistent

You sure about that bit?
Do you need to be consistent or do you look again at the higher of 40 and the average?
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By Wanderer
10th Aug 2020 19:11

Gone Sailing wrote:

... of February 2020 salary

As long as this is a 'fixed rate employee'.
A potential problem is reg 19.1(c). Are the hours 'specified in or ascertained in accordance with their contract'.
If not then they become 'employees other than fixed rate employees' and you have to look at the higher of Regs 20.1(a) & (b).
You may get the same answer if they were paid the same month by month in 2019/2020, just need to be aware of the proper basis period.
Thanks (1)
Replying to Wanderer:
By Gone Sailing
11th Aug 2020 12:00

In my experience, Directors of OMBs are paid a regular amount, normally determined by tax considerations, rather than a fixed contractual rate.
It is the hours that are more perplexing.

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By psimonparsons
10th Aug 2020 21:00

The principle for a director is exactly the same as an employee.

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Replying to psimonparsons:
By Gone Sailing
11th Aug 2020 11:39

Agreed, but we have to turn principles into numbers without a tardis.

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