Furlough when in receipt of public funds

Does my reasoning make sense !?

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Good morning everyone,

some thoughts and advice please - we have a client who provides services to schools and as a result all of their income is from public funds a lot of which are still paying despite the lockdown and despite the client not doing any work for them , but, some schools have decided that they won't or can't pay - overall this has left the overall monthly income down by about 50% - on this basis I am assuming a fairlough claim at 50% of the total furlough is acceptable and justifiable ? I would be grateful for any thoughts! Many thanks 

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By paulhammett
19th Jun 2020 08:51

Is your client self-employed and registered with HMRC as such?

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By Matrix
19th Jun 2020 09:16

50% of what? You don’t claim a percentage of either the CJRS grant for furloughed employees or the self- employed grant.

Check the eligibility below or read the rules for each scheme or get help from your boss, surely they must have been living and breathing these rules for months?

https://www.gov.uk/business-coronavirus-support-finder

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Replying to Matrix:
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By acceje
19th Jun 2020 09:44

There are special rules that apply when local authority money is received in an education setting. The principle is that grants received cover wage costs therefore furlough costs can not be reclaimed as this would be claiming for the same costs twice.
https://www.gov.uk/government/publications/coronavirus-covid-19-financia...

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Replying to acceje:
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By Matrix
19th Jun 2020 10:06

Got it, this was not clear and the others were talking about SEISS. But they wouldn’t just use 50%, they would need to look at the exact funding to determine the percentage they can claim which may or may not be 50%.

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Replying to acceje:
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By Paul Crowley
19th Jun 2020 11:17

If it is only wages costs then surely the company must go under as it it cannot pay anything other than wages.
It is a problem I had when involved with a charity. Funders would pay wages only, others costs were ours to sort out

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By Jambo55
19th Jun 2020 09:20

Apologies - to be clear this is a limited company who has his employees on Furlough, she provides training services to schools

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By Paul Crowley
19th Jun 2020 11:22

A bit challenging. Will councils want to reduce payments in future as the work they paid for did not take place? Might be useful to ask and get a written reply
Viable to claim less than 80% as value of claim is determined by employer.

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John Stokdyk, AccountingWEB head of insight
By John Stokdyk
22nd Jun 2020 14:20

Sorry, a bit late to this one, but wondered if Neil Insull's article on the position for nurseries and dentists receiving public funds would be any help:
https://www.accountingweb.co.uk/tax/business-tax/cjrs-rubiks-cube-of-pub...

I think the calculation is a little more complicated than you suggest. Neil writes: "More detailed guidance has been published by the Department for Education (DfE), which says that where providers receive part of their funding from public sources and part from private income, they can furlough employees whose pay, as a proportion of their total pay bill, reflects the proportion of their funding that is private.

"For example, if the average monthly income is 40% from public funds and 60% from other income, CJRS support could be provided for up to 60% of the payroll costs (limited to 80% of that cost, so 48% overall). This would mean calculating the salaries of staff the employer wants to furlough and ensuring that their wages are no more than 60% of the overall payroll bill."

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