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Single Director Companies & Furlough, new HM updat

Do the details emerging suggest a sole-director-company cannot furlough its one director-employee?

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Latest update made to : gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.

It includes the following:

"To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed."

Please share your opinion on whether this now confirms that a single director cannot furlough his own pay, as even to instruct the payroll would amount to a "critical business task"...that should be allocated ..."to staff that are not furloughed"

Replies (25)

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By paul.benny
06th Apr 2020 13:37

The same guidance says, under "Directors"
"Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC)."

I think that's as clear as you can get that one-person PSCs are entitled to the JRS grants.

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Replying to paul.benny:
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By OrmeGoat
06th Apr 2020 15:38

This also applies to salaried individuals who are directors of their own personal service company (PSC)."

I think that's as clear as you can get that one-person PSCs are entitled to the JRS grants.

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But surely as soon as they do non-statutory duties they are excluded from the scheme, so most directors are excluded and therefore not entitled to the JRS grant?

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Replying to OrmeGoat:
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By lionofludesch
06th Apr 2020 15:46

OrmeGoat wrote:

But surely as soon as they do non-statutory duties they are excluded from the scheme, so most directors are excluded and therefore not entitled to the JRS grant?

Of course.

But the question is, what constitutes statutory duties ?

What's your view ?

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Replying to OrmeGoat:
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By paul.benny
06th Apr 2020 15:50

Given there is a pretty clear statement in the guidance, activities do you think would invalidate this?

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Replying to paul.benny:
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By lionofludesch
06th Apr 2020 16:01

It says "This includes providing services or generating revenue."

If it said "comprises" instead of "includes", I'd agree it was clear.

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Replying to OrmeGoat:
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By iknell
06th Apr 2020 16:44

I'm taking the opinion that provided that the director is not physically undertaking fee related work e.g. plumber fixing leaks, mortgage advisers writing new business then they can be furloughed. If a director pays a bill or opens post (does a few minutes 'work' a day) I'm sure the government won't argue the case.

I'm more than willing to argue with HMRC down the line for all client directors furloughed provided they have acted in this manner.

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Replying to iknell:
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By lionofludesch
06th Apr 2020 16:58

iknell wrote:

I'm taking the opinion that provided that the director is not physically undertaking fee related work e.g. plumber fixing leaks, mortgage advisers writing new business then they can be furloughed. If a director pays a bill or opens post (does a few minutes 'work' a day) I'm sure the government won't argue the case.

I'm more than willing to argue with HMRC down the line for all client directors furloughed provided they have acted in this manner.

Very wise.

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RLI
By lionofludesch
06th Apr 2020 13:42

I don't think it's too much to ask HMRC to say clearly whether basic admin tasks count as work or not.

"Includes generating revenue" - I think we all guessed that. Why clarify that obvious point when there are so many doubtful ones ?

I despair ......

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By insolventnl
06th Apr 2020 16:17

Is there a penalty for claiming it and then finding out you were not eligible?

At least this way you have claimed it if it does indeed fall within the bounds of being eligible. If not, you just don’t get the grant, which you would have not anyway. Also when applying, it’s not as if the one man directors are misleading or lying- it’s just not black and white what is statutory duties.

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Replying to insolventnl:
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By lionofludesch
06th Apr 2020 16:23

insolventnl wrote:

Is there a penalty for claiming it and then finding out you were not eligible?

At least this way you have claimed it if it does indeed fall within the bounds of being eligible. If not, you just don’t get the grant, which you would have not anyway. Also when applying, it’s not as if the one man directors are misleading or lying- it’s just not black and white what is statutory duties.

I interpret statutory duties as anything that is required by statute. Any statute.

I don't think that's unreasonable. Given that HMRC can't be bothered to be more specific.

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By spuddle
06th Apr 2020 16:29

"Statutory obligations" surely must include carrying out necessary basic admin duties....................?
See https://www.facebook.com/BusinessSupportGov/
"Where furloughed directors need to carry out particular duties to fulfill the statutory obligations they owe to their company, they may do so provided they do no more than would be judged reasonably necessary for the purposes, such as, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company."

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Replying to spuddle:
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By lionofludesch
06th Apr 2020 16:41

spuddle wrote:

"Statutory obligations" surely must include carrying out necessary basic admin duties....................?

That's what I keep saying.

Imagine that conversation with HMRC, a couple of years from now.

"Can I see your books for April 2020?"

"I didn't keep any."

"Why not?"

"You said I didn't have a statutory duty to do it."

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Jennifer Adams
By Jennifer Adams
06th Apr 2020 20:05

I have got to say this again (and again!) if you are a director on the minimum salary then whether you do work or not on your business then you will get the grant. Apart from those businesses that remain open of course

This question has been asked a number of times already

Everything you need to know can be found by listening to the FSB webinar which includes commentary on this very subject. The bit about directors comes more or less at the beginning of the hour long webinar (recorded)

https://www.fsb.org.uk/resources-page/coronavirus-financial-help-explain...

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Replying to Jennifer Adams:
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By Matrix
06th Apr 2020 20:12

What do you mean by “remain open”? Is posting on social media and replying to client emails generating revenue? I have assumed so.

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Replying to Jennifer Adams:
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By lionofludesch
06th Apr 2020 23:20

Jennifer Adams wrote:

I have got to say this again (and again!) if you are a director on the minimum salary then whether you do work or not on your business then you will get the grant.

That's a bit further than I'd go myself.

Has to be on minimum salary? As defined by what? Minimum wage? NI threshold?

Whether he works or not? So any old work?

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Replying to Jennifer Adams:
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By lionofludesch
07th Apr 2020 10:34

Jennifer Adams wrote:

I have got to say this again (and again!) if you are a director on the minimum salary then whether you do work or not on your business then you will get the grant. Apart from those businesses that remain open of course

This question has been asked a number of times already

Everything you need to know can be found by listening to the FSB webinar which includes commentary on this very subject. The bit about directors comes more or less at the beginning of the hour long webinar (recorded)

https://www.fsb.org.uk/resources-page/coronavirus-financial-help-explain...

I've watched this webinar now and it just says doing statutory duties is fine. Which leaves us where we were before - deciding for ourselves what are statutory duties. I'm fine with that - I'll just interpret it as widely as I like - but to suggest that this webinar offers some definitive solution for the timid accountant is far from the truth.

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Replying to Jennifer Adams:
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By spuddle
07th Apr 2020 16:58

That sounds very authoritative Jennifer but I would feel much better if I saw information coming direct from the government guidance sources and until I do the position will need to be clarified so I think the questions are justified.

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By NickClayton.aol.com
07th Apr 2020 08:08

I felt quite bullish before the HMRC update yesterday 6 April about directors bring able to furlough themselves. HMRCs original statement was open and ICAEW advised taking a practical approach. However, based on the updated guidance I now don't see how I can realistically advise director clients that many can claim..... including myself.... Gutted

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Replying to NickClayton.aol.com:
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By OrmeGoat
07th Apr 2020 08:30

I'm sick and tired of having to try to interpret government statements. Why can't they say yes or no if directors can be furloughed? After all, most of them are only being paid a nominal amount. Too many of us are wasting our time on the unimportant (the debate) at a time of national crisis.

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Replying to OrmeGoat:
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By lionofludesch
07th Apr 2020 08:50

OrmeGoat wrote:

I'm sick and tired of having to try to interpret government statements. Why can't they say yes or no if directors can be furloughed? After all, most of them are only being paid a nominal amount. Too many of us are wasting our time on the unimportant (the debate) at a time of national crisis.

I'll be claiming. I've yet to see a convincing argument against it.

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Replying to OrmeGoat:
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By NickClayton.aol.com
07th Apr 2020 09:26

I think you're right, think I've lost some perspective here, we are in a national crisis and getting through it is what counts, cheers.

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Replying to NickClayton.aol.com:
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By lionofludesch
07th Apr 2020 08:31

NickClayton.aol.com wrote:

I felt quite bullish before the HMRC update yesterday 6 April about directors bring able to furlough themselves. HMRCs original statement was open and ICAEW advised taking a practical approach. However, based on the updated guidance I now don't see how I can realistically advise director clients that many can claim..... including myself.... Gutted

You must, of course, do what you're comfortable with.

But what's your reservation?

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Replying to NickClayton.aol.com:
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By lionofludesch
07th Apr 2020 08:46

Duplicated

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Replying to lionofludesch:
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By NickClayton.aol.com
07th Apr 2020 09:19

So for me, the bit of the update that reads like a nail in the coffin is the final sentence stating that directors can't do any work in terms of providing services to our companies or the companies clients. Before I read that I thought a claim was justifiable on the basis we are undertaking statutory duties and that one of the statutory duties (so as I understand them) is to do what we can to ensure the continued success of our companies. So I figure I've kind of scuppered myself by running my clients payroll and advising them of how to claim grants etc, whether paid or not really....

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Replying to NickClayton.aol.com:
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By lionofludesch
07th Apr 2020 09:36

NickClayton.aol.com wrote:

So for me, the bit of the update that reads like a nail in the coffin is the final sentence stating that directors can't do any work in terms of providing services to our companies or the companies clients. Before I read that I thought a claim was justifiable on the basis we are undertaking statutory duties and that one of the statutory duties (so as I understand them) is to do what we can to ensure the continued success of our companies. So I figure I've kind of scuppered myself by running my clients payroll and advising them of how to claim grants etc, whether paid or not really....

Oh sure. You can do statutory stuff for your own company but not other folks' companies. Jeez - you'll expect to be paid for that work.

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