Treatment of EA re JRGS

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I am getting conflicting views regarding Employment Allowance and claiming Employers NI through Job Retention Grant Scheme.

My client hasn't received a letter from our application to get approval for EA deductions so when we claimed for the JRGS we did not claim for NI as we understood we would be receiving approval later. They would use the full £4000 in 3 months under normal circumstances.

I have been told that I could have claimed the 80% NI and use the £4000 later in the year when I get approval 

What is the correct way to claim.

Thanks

 

Replies (13)

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By Paul Crowley
26th Jun 2020 11:16

Lots of opinions
If ERNIC paid then a valid claim as far as I am concerned. Problem if it cannot all be used later, and refund for first months is claimed.

Edit
So make sure no retrospective claim for EA for months on furlough.

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By Mr_awol
25th Jun 2020 16:33

Lots of opinions - but certainly HMRCs is pretty clear cut:

"If you have claimed or will claim the grant for employer NICs, you must ensure that you do not receive relief for the same employer NICs costs twice. "

It goes on to say
"To do this, you can either:
- not claim the employer NICs grant
- reduce the grant you claim to take account of the Employment Allowance
- contact HMRC via the employer helpline to restrict the value of your Employment Allowance claim"

https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-c...

So, if you thought you were being clever and claimed for NICs under CJRS that you will later claim Employment allowance for, then you will either have to pay that bit back, not claim it in the first place, or restrict your EA claim (or certainly that is the stance HMRC appear to be taking - and let's face it, that is how it should be.

Oh and before anyone whinges that I've accused people of 'trying to be clever' and have therefore inferred that they aren't - we did this at first too - claimed the grant in full with the intention of adjusting the EA claim later if it turned out we couldn't have both.

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Replying to Mr_awol:
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By PandoraSleeps
25th Jun 2020 17:11

I agree!!

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By Paul Crowley
25th Jun 2020 17:29

HMRC also say

9. Effect on unused Employment Allowance against other PAYE liabilities (ie tax, student loan repayment etc)
The Employment Allowance is based on your employer Class 1 NICs liability shown on your Full Payment Summary (FPS), and normally it is set against your employer Class 1 NICs liability as it arises during the year. The maximum award you can have in a tax year is the lesser of the total of your employer Class 1 NICs and the £4,000 annual amount.
You may not have used your Employment Allowance award in full, for example, because you claimed the "Employment Allowance late in the year and did not accrue enough employer Class 1 NICs liability in the remainder of that tax year." If so, HMRC will offset the unused balance against other current or future PAYE liabilities so, wherever possible, the unused balance of the allowance is not lost.
Where you make a claim for the Employment Allowance after the end of the tax year, this will be offset against any outstanding current or future PAYE liabilities. You can also ask HMRC for a repayment of any unused balance of the allowance provided you have no outstanding PAYE liabilities.
I added " marks to point out that the claim does not bounce back against earlier Sunmissions as earlier submissions including ERNIC remain unaltered.
HMRC need to be contacted if employer wants a refund of earlier ERNIC

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Replying to Paul Crowley:
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By PandoraSleeps
25th Jun 2020 19:05

Yes, although that’s not from the CJRS guidance and so I believe is subject to the bit posted above by Mr_awol.

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Replying to PandoraSleeps:
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By Paul Crowley
25th Jun 2020 19:21

For OPs benefit

This has been debated on other treads

There is no consensus of opinion.

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By PandoraSleeps
25th Jun 2020 20:25

Further to the other discussions that Paul quite rightly draws attention to, it is interesting to note that ICAEW have changed their website piece on this again.

https://www.icaew.com/insights/tax-news/2020/apr-2020/cjrs-emerging-issu...
“It is not clear from this guidance whether HMRC considers it acceptable to delay claiming employment allowance until later in the tax year when CJRS grants are no longer being claimed. The employment allowance legislation does not require an immediate claim and allows claims to be backdated four years. The CJRS guidance requires the grant to be reduced by the employment allowance but only where it has been claimed.

The Tax Faculty put this scenario to HMRC and in a response received prior to this version of the guidance HMRC appeared to confirm that it does not take exception to this approach so long as where employment allowance has been claimed, the CJRS grant is reduced accordingly and relief is not claimed for the same cost twice. This latest version of the guidance puts the matter in doubt once more; the Tax Faculty continues to press HMRC for clarity but it not clear whether this will ever be forthcoming. ”

So it looks like it’s all still as clear as mud! If only HMRC would just clearly and definitively put the matter to rest. I guess in the interim it’s up to each of us to decide what we think is right.

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Replying to PandoraSleeps:
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By Paul Crowley
25th Jun 2020 22:24

Critical is not claiming twice.
But I absolutely agree. HMRC need to be definitive. At the moment just being evasive.

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Replying to Paul Crowley:
RLI
By lionofludesch
25th Jun 2020 23:14

Personally , I think the advice quoted is clear. Imho, you're grand if the secondary NI paid after July is £4000+ and you make your claim in Month 5 or later.

If not, you may need to make an adjustment.

I've not claimed NI for all but three of my clients and I'm confident that I won't need to make an adjustment for those three.

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Replying to lionofludesch:
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By Wanderer
26th Jun 2020 07:53

I'm with Lion.

I've also kept copies of SIX different versions of the ICAEW advice to justify my position.

My view is that if the contrary view expressed by some on this subject is taken then potentially the client may have a claim against the accountant.

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Replying to Wanderer:
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By Paul Crowley
26th Jun 2020 11:09

Agreed
Figures individually may not be high, but adding them altogether could be very costly for some

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Replying to lionofludesch:
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By Paul Crowley
26th Jun 2020 11:12

With me it is only two.

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Replying to Paul Crowley:
RLI
By lionofludesch
26th Jun 2020 14:59

Paul Crowley wrote:

With me it is only two.

It's surprising how many payrolls there are where EA covers secondary NI in its entirety.

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