Director paid once a year - furlough?

Director paid once a year in March and furlough? Follow up to March 29th question

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I've read through the legal documents formalising the CJRS and am still struggling to determine if a Director who is always paid once a year in March (the 8,600 or so) who meets the furlough criteria (business completely dried up) can claim his average pay for the tax year 19/20 is 719 per month and claim 80% of this whilst furloughed. He has been on the payroll for years and appears on all the RTIs albeit they show nil pay except in March.

Replies (13)

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RLI
By lionofludesch
17th Apr 2020 14:06

I'd claim but - hey - here's another problem with that noted time-saver, the annual pay period.

What a load of tosh it is !!

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By NYB
17th Apr 2020 14:26

I too have one I am just shutting my eyes over. What I dont want to lose is the annual reporting period. One could technically start the claim now but then that means monthly reporting because once yoiu change you cant revert back again.

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Replying to NYB:
By jon_griffey
17th Apr 2020 14:27

You can revert back. Its just that HMRC automatically set it to expect monthly reporting. You just have to tell them again.

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Replying to NYB:
RLI
By lionofludesch
17th Apr 2020 14:31

NYB wrote:

I too have one I am just shutting my eyes over. What I dont want to lose is the annual reporting period.

Why not ?

I've never seen the advantage.

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Replying to lionofludesch:
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By I'msorryIhaven'taclue
17th Apr 2020 14:38

Bit of a disadvantage if the annual salary payment was made / reported post 19th March 2020.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

5. The costs of employment in respect of which an employer may make a claim for payment under CJRS are costs which-
(a) relate to an employee-
(i) to whom the employer made a payment of earnings in the tax year 2019-20 which is shown in a return under Schedule A1 to the PAYE Regulations that is made on or before a day that is a relevant CJRS day"

Ouch!

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Replying to I'msorryIhaven'taclue:
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By chrisacc1985
20th Apr 2020 17:21

"13.1 For the purposes of CJRS-
(a) a day is a relevant CJRS day if that day is-
(i) 28 February 2020, or
(ii) 19 March 2020."

I believe that ISIHAC is correct unfortunately.

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Replying to I'msorryIhaven'taclue:
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By chrisacc1985
20th Apr 2020 17:21

DUPLICATE

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Replying to I'msorryIhaven'taclue:
RLI
By lionofludesch
20th Apr 2020 18:03

I'msorryIhaven'taclue wrote:

Bit of a disadvantage if the annual salary payment was made / reported post 19th March 2020.

I'm a huge critic.

Folk set these up to save themselves five minutes work a month and then post a raft of threads with problems they've created themselves.

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Morph
By kevinringer
18th Apr 2020 10:12

I want to make you aware that 3 documents were published on GOV.UK 17/04/20 evening which may help you.

1. New guide with worked examples at https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim.... This addresses holiday pay including bank holidays.
2. New step-by-step guide at https://www.gov.uk/government/publications/coronavirus-job-retention-sch....
3. The employers guide has been updated (this is version 5) at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus....

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By soundadvice
18th Apr 2020 13:26

Looking at that latest detailed guidance from HMRC with their examples it looks like it should be okay for a Director paid annually in month 12 to claim the furlough grant (so long as he meets all the main criteria).
Assume he furloughs from 6th April 2020.
Firstly if he has been on payroll for several years then we can assume he was on payroll in 18/19 and 19/20 and therefore on March 19th 2020 the key date and he could use either the average pay for 19/20 method or the pay for the same period last year (month 12) method.
With the first method his average pay for 19/20 will be let’s say 8600 approx (albeit all paid in month 12) so this calculation following HMRCs example would be 8600 / 12 x 80% per month.
With the second method if he earned say 8400 in the same period last year (so month 12 2019) then the calculation following HMRCs example would be 8400 / 12 x 80% per month.
Is that how others read the examples provided?

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Replying to soundadvice:
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By Matrix
18th Apr 2020 15:05

No for annually paid Directors then I would assume he has a verbal contract for fixed pay of £700 or whatever a month which is all paid in month 12.

If you assume he is on variable pay then you would have 80% x £8,400 wouldn’t you being the higher amount? Why are you dividing it by 12? The rules say to look at the amount paid in the equivalent month last year. So it would completely distort the claim.

So the only way to not overclaim is to assume he is on fixed pay.

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By kevinrobotham
23rd Apr 2020 09:46

If it is possible to claim for a M12 payment say made on 30 March 2020 how do you get round the problem of HMRC portal stating ineligible as was not on payroll on 19 March even if they were on payroll in March 2019?

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Replying to kevinrobotham:
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By marcusredford
23rd Apr 2020 10:22

This is my question as well. Essentially, has anyone had success making a claim for a director paid once per year, and how did you do it??

thank you

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