I have a director on furlough who has just advised me that they have kept some of the furlough money received in their business account rather than transferring to a personal account. The business has been forced to remain shut due to COVID and has had access to no other grants/funding, but has endured some on-going running costs (HP, insurance etc).
Could this cause problems down the line, or would it be prudent to withdraw the furlough each month (only to then have to put some back into the business account via DLA)?
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The rules of the CJRS scheme are explicit on this point. The entire amount claimed (apart from mandatory deductions) must be paid to employees - and by implication through payroll.
If your client wishes to retain funds in the company, s/he must payroll CJRS receipts in the relevant months and account for PAYE/NI.
The rules of the CJRS scheme are explicit on this point. The entire amount claimed (apart from mandatory deductions) must be paid to employees - and by implication through payroll.
Just saying, like, but during the summer, the grant wasn't always 80% but the minimum payable to the employee was.
When you claim furlough money you are specifically asked if at least 80% of wages will be paid to the employee. If you don't answer "yes", you can't continue your claim.
So, if you don't pay the wages, there are indeed likely to be consequences as the claimant has lied to HMRC.
Nothing to stop the director lending his net pay back to the company, though.
Just payroll the furloughed amount and post the net salary to the director's loan account. Then withdraw the funds as and when.
I think there is a little more to it than that.
If non-payment of CJRS as salary has been going on for several months, we also have missing RTI submissions and, potentially, late settlement of PAYE.
(That said, lots of assumptions here - notably that the director has not been paying themselves a salary commensurate with the CJRS claims. I don't know whether the CJRS legislation explicitly prohibits deferred payments to employees or that it just requires that the full claim amount is paid over.)
I think there is a little more to it than that.
If non-payment of CJRS as salary has been going on for several months, we also have missing RTI submissions and, potentially, late settlement of PAYE.
(That said, lots of assumptions here - notably that the director has not been paying themselves a salary commensurate with the CJRS claims. I don't know whether the CJRS legislation explicitly prohibits deferred payments to employees or that it just requires that the full claim amount is paid over.)
I thought the same - but there's only an obligation to pay this money to the employee. As opposed to pay what you claimed on a month by month basis.
As long as the full 80% is paid, I reckon that's grand. And, as a director, both tax and NI are cumulative anyway so no problems there.
We don't know about missing RTI submissions but the chances are that nil returns have been made in those missing months. I would straighten this up with the February payroll, if not already submitted, definitely by March. If the fella needs to lend money back to thed company, so be it.
Agree. The risk, though, is that HMRC see CJRS claims for a period with no or nil RTI and that generates queries.
Is this just asking about movement of money?
If the wages were made available and credited to director's loan account, I see no problem
ASSUMED payroll is operating in the normal way
To me normal is monthly, not once a year
Is this just asking about movement of money?
If the wages were made available and credited to director's loan account, I see no problem
ASSUMED payroll is operating in the normal way
Fair point.