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Is it right to claim the correct furlough amount?

Employee with 2 jobs and pay varying between them is entitled to furlough pay of 148% of normal pay

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An employee is working for two businesses, dividing his time between them as the directors require. so that pay from each has varied over the last year, but total salary each month across the two jobs has been the same. The furlough scheme works out that his pay for Job 1 is based on his full amount for May 19 (as it's higher than the average for the year), and for Job 2 it's the average since Job 2 started in June 2019, up to the end of March 20. As a result his furlough entitlement is actually 148% of his normal monthly salary, rather than 80% as the scheme is designed for. My calculations and the HMRC calculator both agree on this, so although it seems crazy it is correct! I asked HMRC on their webchat and they said it's not a problem, and it seems to me to be perfectly legitimate as each company is treated separately, but at the same time it feels not quite right. Is it an abuse of the system to claim this correctly?

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By Duggimon
21st May 2020 17:16

I am reasonably sure that your only options are to claim that amount or make no claim at all as the reference salary is specifically defined in the legislation, and the claim can only be based on that amount.

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By the_drookit_dug
21st May 2020 17:16

I think he's just lucked in due to a quirky alignment of his circumstances and the rules of the scheme.

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By Truthsayer
21st May 2020 17:21

All taxes and benefits see people being lucky or unlucky. This is just one example of that. It's perfectly moral to claim if that's what the rules say.

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By Wanderer
21st May 2020 17:47

Mmmmmm
Think you may have started on the wrong foot. The calculations you have made sound like you are treating him as a variable rate employee. This comment you have made:-

Quote:

so that pay from each has varied over the last year, but total salary each month across the two jobs has been the same. 

suggests that he is, in fact, a fixed rate employee.
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By Wanderer
21st May 2020 17:48

Edited.

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Replying to Wanderer:
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By Dougj
21st May 2020 17:49

As his two employers are linked (by a common director) they agreed to meet his regular total salary and divide it up each month according to hours worked, but with respect to each individual company he is on a variable rate dependent on time worked in the pay period. An unusual arrangement, not foreseen by HMRC in considering how to calculate furlough pay.

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By Wanderer
21st May 2020 18:01

Quote:

As his two employers are linked (by a common director) they agreed to meet his regular total salary and divide it up each month according to hours worked, but with respect to each individual company he is on a variable rate dependent on time worked in the pay period. An unusual arrangement, not foreseen by HMRC in considering how to calculate furlough pay.

You are barking up the wrong tree. This just confirms that he is a fixed rate employee!
And this is NOTHING to do with what HMRC foresee. They don't make the rules, they do what they are told.
If you continue with you claim it will all likely go through but be prepared for the comeback when it is realised that it is against the regulations:-
Rishi wrote:
2.5 No CJRS claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purpose of CJRS.
Make sure you also report yourself and your client for Money Laundering whilst you are at it.
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Replying to Wanderer:
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By Dougj
21st May 2020 18:43

This claim is still being considered, and I note your caution. That's why the question was asked in the first place.
However it is entirely feasible for the same scenario to exist with unrelated entities and furlough claims being submitted by independent sources, in which case each would be doing right by the system and the employee, even though the aggregate result is bizarre.
The alternative is to make up a fixed salary for each entity equivalent to the normal monthly total and work it out from there, but in each case the figure taken could be questioned as it doesn't follow the rules.

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By Wanderer
21st May 2020 19:00

Quote:

However it is entirely feasible for the same scenario to exist with unrelated entities and furlough claims being submitted by independent sources, in which case each would be doing right by the system and the employee, even though the aggregate result is bizarre.

No problem with this statement, just it doesn't apply here.
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Replying to Dougj:
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By Wanderer
21st May 2020 19:08

Quote:

The alternative is to make up a fixed salary for each entity equivalent to the normal monthly total and work it out from there, but in each case the figure taken could be questioned as it doesn't follow the rules.

No, no, no, now you're just making stuff up!
We've established that they are a fixed rate employee. Now each employer pays / claims for them based on what what they paid them (probably) for February. See reg 7.7
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Replying to Wanderer:
JCACE
By jcace
21st May 2020 20:47

Quote:

We've established that they are a fixed rate employee.


With all due respect, I'm not sure we have established that at all. Of which employer is he a fixed rate employee? Looking at either employer in isolation, he would not appear to be a fixed rate employee.
Further, if the argument is that he is in essence working for a single employer, perhaps para 4 would apply:
"If an employer has more than one qualifying PAYE scheme-
(a) the employer must make a separate claim in relation to each scheme, and
(b) the amount of any payment under CJRS will be calculated separately in relation to each scheme."
I can see the reasoning behind your approach, Wanderer, I'm just not certain that it properly applies the regulations.
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Replying to jcace:
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By Wanderer
22nd May 2020 01:44

Para 7.6.
Para 2.5.

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Replying to Wanderer:
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By PandoraSleeps
23rd May 2020 13:11

I don't understand. Para 7.6(e) (for the definition of a fixed rate employee) says:

"the person is entitled under their contract to be paid, where practicable and
regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”)"

If this person is working under TWO separate contracts of employment for two employers, and is not being paid EQUAL instalments in respect of either of those contracts, then he or she must be a variable rate employee for both.

However the position if different if there is ONE contract of employment, or a joint contract.

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Replying to PandoraSleeps:
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By Wanderer
23rd May 2020 13:50

Quote:

However the position if different if there is ONE contract of employment, or a joint contract.

Nail, head.
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By Wanderer
21st May 2020 18:06

Quote:
Is it right to claim the correct furlough amount?
Employee with 2 jobs and pay varying between them is entitled to furlough pay of 148% of normal pay

An employee is working for two businesses, dividing his time between them as the directors require. so that pay from each has varied over the last year, but total salary each month across the two jobs has been the same. The furlough scheme works out that his pay for Job 1 is based on his full amount for May 19 (as it's higher than the average for the year), and for Job 2 it's the average since Job 2 started in June 2019, up to the end of March 20. As a result his furlough entitlement is actually 148% of his normal monthly salary, rather than 80% as the scheme is designed for. My calculations and the HMRC calculator both agree on this, so although it seems crazy it is correct! I asked HMRC on their webchat and they said it's not a problem, and it seems to me to be perfectly legitimate as each company is treated separately, but at the same time it feels not quite right. Is it an abuse of the system to claim this correctly?

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By Wanderer
21st May 2020 18:22

Her's a judgement by our very own Richard Thomas that you and your client(s) may also like to chew over if the circumstances are such that the employee isn't gaining qualifying years as well:-
http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j10751/TC0...

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