The employment allowance dilemma
Employers need to estimate their total class 1 NIC liability for 2020/21 and in some cases correct coronavirus job retention scheme (CJRS) claims without delay.
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Thank you Rebecca. What about the most effective course of action to take where no claim was made for employers NIC in the CJRS claims up to July 2020 , where the total amount for the year will exceed the employment allowance. We have amended one claim on webchat .............the second time we tried it was nigh on impossible to get HMRC to action it .
The issue we are finding is that our clients may have been in the £4k plus CJRS NIC group, but then redundancies have happened and more may happen later in the tax year, which makes the yearly NICS bill harder to estimate.
This is really helpful. If you didn’t claim NIC as part of CJRS but NIC for the year will exceed £4000 and the EA can you correct an earlier CJRS claim to claim NIC? Is this done by increasing October claim?
Yes, very helpful thank you. I'm in a similar position to other responders - I didn't claim Er's NI for a client but now their business has recovered it looks as though the Er's NI for the year will more than exceed the EA plus the amount I could have claimed under CJRS. Although if there is a lockdown or other business downturn and they make employees redundant then it might not. Their furlough stopped in July so how do I now claim the extra amount relating to NI? Presumably if things change before 5/4/21 I would have to then un-claim. What a confusing situation in the absence of a crystal ball!
Many thanks for the post. We have in fact already tried to contact HMRC on the employer helpline to try and reduce the EA Claim and they flat out refused to do so saying it was not possible. We spoke to 6 different people across different teams including the CJRS and Employer helpline and all were stumped, but adamant the EA could not de restricted. Has anyone else tried to speak to HMRC about this?
I rang several different HMRC lines, the line that helped me in the end was the debt management line - they prevented the EA being applied to months 1-4, however, I am still waiting for this data to feed through to my agent dashboard.
Hi yes I spoke to employers helpline twice, webchat, payment helpline and the Job retention helpline - all stated that they cannot adjust the amount for EA.
I spoke to our software provider, SAGE, who confirmed with them the EA is backdated to month 1 regardless when in the year you tick the EA box.
Therefore I had no choice but to go back into all our claims that had furlough ni and remove the NI element, just to get the EA straight.
Hi yes I spoke to employers helpline twice, webchat, payment helpline and the Job retention helpline - all stated that they cannot adjust the amount for EA.
I spoke to our software provider, SAGE, who confirmed with them the EA is backdated to month 1 regardless when in the year you tick the EA box.
Therefore I had no choice but to go back into all our claims that had furlough ni and remove the NI element, just to get the EA straight.
My wife uses Moneysoft and having tried it out in a 'test' system [copy of a client's payroll] we've found we can edit the PAYE record for thepayroll so that EA is not over claimed i.e. adjusting for CJRS element. It's a bit tedious as it will mean amending each month but probably easier than contacting HMRC from what I've read above and the client has been guaranteed the max EA possible.
Only necessary for those with possible EA under £4k
Your software might allow it but unfortunately that doesn't mean it shows the same at HMRC's end. HMRC just applies EA as an all or nothing from month 1, so unless they can change something you'll have a disparity between the two sets of figures.
Agree with matttaxnpayroll, we use BrightPay, and we started to apply the EA from month 5, this did not backdate on our system. Unfortunately this just meant it did not match HMRC's system as the claim was backdated to month 1 showing an overpayment on the account, which will eventually lead to clients getting overpayment letters (albeit a lot slower than any underpayment letters).
Your software might allow it but unfortunately that doesn't mean it shows the same at HMRC's end. HMRC just applies EA as an all or nothing from month 1, so unless they can change something you'll have a disparity between the two sets of figures.
It's not the employer's fault if HMRC's software isn't up to the task.
Just make sure your records are right and you can explain to HMRC where they went wrong.
I posted a work around for Moneysoft two months ago. Pointless now, obviously.
Glad everybody got sorted. There could've been a lot of PI claims being made.
We all predicted EA problems so why didn't HMRC? HMRC could have sorted out this mess before it started back in April. But HMRC didn't. Some of us contacted HMRC but didn't get clear rules. Some of us asked questions on the HMRC Agent Forum, but no clear answers. Employers and agents wasted loads of time trying to guess the right rules and we didn't all make the right guess. It's a bit like the holiday pay fiasco: HMRC didn't issue any rules until the week after Easter when we all needed to rules the week before Easter.
We all predicted EA problems so why didn't HMRC? HMRC could have sorted out this mess before it started back in April.
It's very poor stuff from HMRC.
Once again, we have a demonstration that they just don't understand working from the sharp end.