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Delayed Employment Allowance

Now being claimed on Moneysoft and backdates claim - is this/what is right ?

Didn't find your answer?

I have one client where the Employment allowance was not claimed following the IACEW guidance whilst the x5 staff were on Furlough.

They have come back to work in July and so we have now claimed the EA but on the software it retrospectively applies the EA claim to months 1-3 where it was originally disclaimed and so it shows on the system that there is now an overpayment to HMRC in those months as the full amounts were paid including Ers NIC.

It means no payment due to HMRC for July as this overpayment is used but my query/concern/issue is that does this now mean that we have to repay the ERs NI we received under the CJRS or do we get to retain that benefit and then get the full £4k EA on top of that ?

I have read (Croner  Covid-19 pages) that maybe they should deduct the amount received under the CJRS from the EA being claimed (maybe I am misreading that but it was here halfway down https://www.cronertaxwise.com/community/coronavirus-covid-19-furloughed-employees/ )

Just want to make sure we get this right so any pointers greatly received as we dont want to overclaim 

Replies (33)

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RLI
By lionofludesch
30th Jul 2020 17:50

I'd be claiming from month 5 myself.

You can still claim for secondary NIC up to 31 July.

Up to you, though.

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Replying to lionofludesch:
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By Wanderer
30th Jul 2020 17:55

Not when they've returned to work for (assumed whole of) July!

Like you allude to though I'm leaving all 'stalled' EA claims until at least August.

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Replying to lionofludesch:
Part on Dudes
By Partyondudes
30th Jul 2020 18:06

Thanks lion, i am claiming now as the last ee came off Furlough on 10th July . The issue (I think) is that Moneysoft shows the claim being backdated to months 1-3 so made me nervous that i am essentially resubmitting - may be just a Moneysoft issue as cant claim from month onwards 4 only.

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By Wanderer
30th Jul 2020 17:52

Partyondudes wrote:

It means no payment due to HMRC for July as this overpayment is used but my query/concern/issue is that does this now mean that we have to repay the ERs NI we received under the CJRS or do we get to retain that benefit and then get the full £4k EA on top of that ?

Obviously this has been the subject of much debate however following the advice of the ICAEW I would say that you get to retain the CJRS AND get the £4k on top, subject to not over-claiming employer's NIC overall.

I wouldn't worry too much about the way MoneySoft presents it. The claim is made on an EPS rather than the monthly FPSs.

In 2019/2020 I had a client with a single one director employee at the beginning of the year so wouldn't qualify. Later in the year, M12, they took on an employee so qualified. EPS submitted 20/03/2020 & MoneySoft 'jigged it back' to earlier periods like you've seen adjusting all the bought forwards. When however I look on PAYE online it shows the amounts originally due with the original payments allocated against them with the £3,000 only showing as a credit later (in Month 11).

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By Paul Crowley
30th Jul 2020 17:57

Same here on claiming late for furloughed.
We use sage and I am not aware the the claim went back to earlier periods on others where claims were made in month 2.
Are you working an odd arrangement, quarterly or annually or sum such?

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By SXGuy
30th Jul 2020 18:01

As far as I was aware, if you claim EA mid way through the year it should start from that point, not get carried back. I was always under the impression that if you needed to carry back unused EA it was something that had to be done in writing after year end (I may be wrong). But as the previous post said, it may well be just how moneysoft shows this deduction and it should in reality only kick in the month you submit the eps.

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Replying to SXGuy:
Part on Dudes
By Partyondudes
30th Jul 2020 18:08

Thanks - if the consensus is that Moneysoft shows it like that but it will be right on HMRC that is great - just concerned though as on the software, if you enter the "tax actually paid" it then gives you these overpayments in months 1-3 (sorry i cant post screenshot!)

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Replying to SXGuy:
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By Paul Crowley
30th Jul 2020 18:27

My understanding as well that can only backdate by requesting HMRC in writing

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RLI
By lionofludesch
30th Jul 2020 18:20

The issue is that, if you pay less than £4000 in secondary NI going forward, you may be double claiming for relief via CJRS and EA.

Happily, my clients are all pretty clear cut, one way or the other. They either pay way over £4000 or nowhere near.

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By NYB
31st Jul 2020 10:28

Jusat out of interest I iuse a different payroll package but itallows me to start NIC allowance from whatever month I fancy. Are you sure Moneysoft hasnt got that in there somewhere. I had to contacy my software to ask.

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By claudialowe
31st Jul 2020 15:49

I'm interested in the answer as well, as I have got one client now back with all staff working full time, and I got the same issue with Moneysoft................

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RLI
By lionofludesch
31st Jul 2020 17:43

I haven't entered the claim in yet. I'm going to leave it til the end of Month 5 and see what happens.

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By jules66
02nd Aug 2020 19:52

Ive been thinking about this issue too. I thought I'd read in the HMRC guidance that you were unable to claim EA for any ers NIC that you'd reclaimed under CJRS scheme and that you'd have to contact HMRC to adjust the amount of the EA.?

I also think that irrelevant of when you submit the EA claim that it will backdate to month 1 on HMRC systems giving a credit if full amount of Paye has been paid each month?

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By Homeworker
03rd Aug 2020 10:51

We use Moneysoft too and have come across this issue when claiming EA for the first time part way through a year. I also have access to HMRCs payments and liabilities data and can confirm that it is not backdated in their data, but only included in the month it is actually claimed. However, they do give the whole amount due up to that point. There does not seem to be any way to deal with a part year claim in Moneysoft and so I took the view that if the NI due on the pay for the year was going to be wholly covered by the EA, we would not include it in the CJRS claims.

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By john hextall
03rd Aug 2020 11:30

I thought in the original guidance, if you were claiming EA, you could not also claim for ERs NI in the CJRS. It did seem a bit unfair at the time. Are you now saying it's possible to claim both?

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Replying to john hextall:
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By Wanderer
03rd Aug 2020 11:37

Guidance was badly worded & confusing. If you had claimed EA for the furloughed months then you couldn't also include it in the CJRS claim. Nothing to stop you from not claiming EA for the furloughed months (and claiming ER NIC under CJRS) then later making an EA claim for the non furloughed months.

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Replying to Wanderer:
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By Paul Crowley
03rd Aug 2020 11:47

Exactly as I understand the rules.
Do not claim until August pay run to maximise furlough benefits, provided the logic fits with getting full EA August to March

I thought pretty well covered elsewhere, but contantly confused in responses on this site

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Replying to Paul Crowley:
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By Paul Crowley
04th Aug 2020 12:05

HMRC latest:
"Employers who delay their Employment Allowance claim and have unused Employment Allowance available at the end of the tax year can use this to reduce other tax costs.
Employers who have received a grant for employer NICs costs through the scheme should deduct the amount of grant they have received from the amount of Employment Allowance
they have left before they use it, if not doing so would result in receiving relief for the same cost twice. Attempting to get relief for the same costs twice is a fraud and may result in
claims being investigated."

From ICAEW guidance, in response to above:
It is not clear from this guidance whether HMRC considers it acceptable to delay claiming employment allowance until later in the tax year when CJRS grants are no longer being
claimed. The employment allowance legislation does not require an immediate claim and allows claims to be backdated four years. The CJRS guidance requires the grant to be
reduced by the employment allowance but only where it has been claimed.
The Tax Faculty put this scenario to HMRC and in a response received prior to this version of the guidance HMRC appeared to confirm that it does not take exception to this approach
so long as where employment allowance has been claimed, the CJRS grant is reduced accordingly and relief is not claimed for the same cost twice. This latest version of the guidance
puts the matter in doubt once more; the Tax Faculty continues to press HMRC for clarity but it not clear whether this will ever be forthcoming

My comment:
HMRC agreed that delay was acceptable, then put out something contradictory.
It would appear HMRC is attempting to convince employers to reduce their CJRS, but refusing to answer the direct question needed to clarify.
If HMRC think they are correct in law, Why will they not answer?
If it is supposedly fraud then why would HMRC not say so directly to the tax experts at the ICAEW?

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By raybackler
03rd Aug 2020 12:32

With the new requirement about state aid, every client needed to submit an EPS in the new the tax year to claim EA, whereas in previous years the EA claim was rolled over each year from the first EPS ever submitted.

So we submitted an EPS for all clients as part of the start up of the new tax year. Also, the HMRC guidance on CJRS claims states that the NI claim has to be adjusted for EA. There is nothing I could find that says, "unless you have delayed claiming". In any case how do you delay a claim once submitted?

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Replying to raybackler:
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By Wanderer
03rd Aug 2020 12:43

raybackler wrote:

So we submitted an EPS for all clients as part of the start up of the new tax year.

EPS wasn't due until 5 May by which time we were all well into CJRS. We, therefore, only claimed EA then where appropriate with knowledge of likely CJRS claims.
raybackler wrote:
Also, the HMRC guidance on CJRS claims states that the NI claim has to be adjusted for EA.
Only if EA claimed.
raybackler wrote:
In any case how do you delay a claim once submitted?

Submit another EPS.
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By Handa
03rd Aug 2020 12:42

I have read this post and responses with great interest because I am also Moneysoft software user. This issue is specific with Moneysoft. Like many, I have followed the HMRC's original guidance and that provided by experts on AccountingWeb & also ICAEW in not claiming Employment allowance in March to May month until later in year. I made claims for ER NIC as part of CJRS and claimed EA in June.. However HMRC's s updated guidance notes in 12th June and 10th July now state that "When working out how much ER NIC you can claim back from the scheme, you should subtract any EA you have used in that pay period. If you have claimed the EA and you do not have to pay any ER NIC in a pay period, you should not claim for any employer NIC costs through the scheme....... Employers who delay their ER claim and have unused EA available at the end of tax year can use this to reduce other tax costs. ERs who have received grant for ER NIC costs through the scheme should deduct the amount of grant they have received from the amount of EA they have left before they use it, if not doing so would result in receiving relief for the same cost twice. Attempting to get relief for the same costs twice is a fraud and my resilt in claims being investigated". Thus it appears to me that in order to save penalties, one has to repay the ER NIC claimed for previous months by adjusting the ER NIC claim to be made in July. I would be interested to hear views on this.
I have tried to make correction but HMRC online claim page does not allow us to enter negative figure in the box ER NIC. Webchat with HMRC agent didn't provide any solution how to enter negative figure. Any solutions/suggestions would be appreciated. Thanks

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Morph
By kevinringer
03rd Aug 2020 13:29

See https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim06...

Once the Employment Allowance has been claimed, employers do not need to tell HMRC each year that they are continuing to claim that allowance. The Employment Allowance is automatically carried forward from one tax year to the next until:

the employer informs HMRC they are no longer eligible to claim the allowance, or
HMRC consider the employer is no longer eligible to claim the allowance

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Replying to kevinringer:
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By Wanderer
03rd Aug 2020 13:46

All changed for 2020/2021. No longer automatically carried forward and has to be claimed.

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Morph
By kevinringer
03rd Aug 2020 13:37

There's one way to find out: check the client's HMRC PAYE account after EA has been applied for. Has HMRC backdated it to 6 April? My understanding was that EA is always applied from 6 April regardless of when it is applied for, but I can't find anything that confirms that.

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Replying to kevinringer:
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By Wanderer
03rd Aug 2020 13:47

Wrong, see my post 30th Jul 2020 17:52.

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By NYB
03rd Aug 2020 14:08

Another buggers muddle of a mess. Initially one had to use the EA first before claiming thru Furlough. It was clear in the instructions. My payroll still flags that up. Then it changed in an airy fairy way & morphed into an “ either or” situation. By this time my payroll Furlough was well underway. I have a couple clients who have lost out over this as their 4K was used up by month 2. I feel awful. I keep quiet. Of course the majority of mine don’t reach the 4K limit so it’s neither here nor there
And yes - a new EPS has to be sent now Each April. To do with the De Minimus State aid thing. Another box that has to be ticked. It’s so easy to miss these amendments

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Replying to NYB:
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By Paul Crowley
03rd Aug 2020 14:57

And the Sage instructions were useless stating that no claim could be made unless the confirmation letter had been received.

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Replying to Paul Crowley:
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By deborahkelledy
04th Aug 2020 09:44

I also use Sage and was waiting for confirmation letter which never arrived. Spoke to HMRC who said it was OK to claim EA if you considered yourself eligible.
I claimed for 2 companies (neither of whom had furloughed employees), and HMRC started the claim from 6th April 2020 giving overpayments.
Have not yet claimed for employers who had furloughed employees as don't want the EA automatically carried back to April - currently investigating - will update when I find out what to do!

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By Handa
03rd Aug 2020 15:42

Further to my earlier posting, I would add that Moneysoft software stopped providing the CJRS calculations facility wef 1st July 2020 and asks you to calculate the claim manually or to use HMRC online calculator. I found that HMRC calculator provided wrong answers for EEs with Flexi Furlough dates in July. I wonder whether other software houses have provided CJRS calculation facility and how members dealt with.

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Replying to Handa:
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By NYB
03rd Aug 2020 16:23

I found Brightpay kind of got part way there as it asked for the hours worked against normal hours but the amount had to be self calculated. That involved my feeble spreadsheet based on HMRCs example. And then the claim form on the software was in place. I can’t be doing with the HMRC calculator.
My client with Flexi employees found it as traumatic as me - having to calculate the variable pays up to end of month when he normally cuts off on 24th. He phoned today to say he was bringing all the Flexis back to work. A sigh of relief for me.

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Replying to Handa:
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By Wanderer
03rd Aug 2020 17:03

Handa wrote:

I found that HMRC calculator provided wrong answers for EEs with Flexi Furlough dates in July.

I calculated July flexi furloughs from first principles based on the 25 June Treasury direction then cross checked them with the HMRC calculator and found all in agreement.
They were, IMHO, fiendishly over complicated but did agree.
Why have you concluded that the HMRC calculator was wrong?
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Replying to Wanderer:
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By Handa
03rd Aug 2020 19:00

In calculating the ER NIC and Pension Contributions, HMRC calculator automatically used the Furlough period and Days Worked to be the same whereas monthly paid employees were Flexi furloughed for part of month. Also it made same errors for employees paid on variable hours basis and furloughed for part of month. It was correct for straight forward employees paid monthly fixed hours and furloughed for full month. I used HMRC guidance notes dated 1st July and 10th July to calculate figures.

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By Paul Crowley
04th Aug 2020 12:08

Discussed on todays Any answers live with no actual specific conclusion.

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