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In The News
Article Date: 02 April 2020
Hundreds of questions were submitted during the webinar to Mike and lots of them were around Furlough, so ASE has produced a Q&A guide to try and help retailers through this unprecedented time
In case if you would like to watch the recorded webinar: 1. click the link below 2. Leave your details 3. Proceed watching the webinar
https://What-options-do-Retailers-have-amidst-COVID-19?
The questions had many similar themes so at the risk of missing one or two, this is summary of the different questions raised (with apologies to those who do not think there particular question has been answered).
Please note that the answers are the opinions of ASE Plc.
They are based upon our interpretation of the guidelines issued by HMRC which you should note are not very detailed. When interpreting the language of the guidelines, readers are able to adopt one of many legal rules and methods in order to understand the message provided. Such rules and methods include the literal rule, the mischief rule and the purposive approach.
Our method has been to adopt the common sense rule; to look at what HMRC are trying to say and to adapt our interpretation accordingly.
Directors who are paid a salary are eligible to receive income under the furlough scheme just like any other employee.
Dividends are a share of profits and are not earnings.
Furlough payments will be paid only in relation to earnings.
Unless they are actually ill, they qualify for furlough payments.
No details have been published but employers will be required to submit details to HMRC in due course in order to receive employee furlough funds to meet the payments required.
Directors qualify for furlough payments if they receive earned income from the company.
The payment is gross and in addition, the furlough payment will include employers NIC and the employer’s stakeholder pension payment of 3%.
PAYE, NIC, and the pension payment will be paid to HMRC and the pension provider in the normal manner from the funds received.
The full details are set out in the attached link.
Check if you could be covered by the Coronavirus Job Retention Scheme
We can all read what HMRC has said and we are all none the wiser in terms of what it means precisely.
In terms of the motor trade, we have advised that average annual earnings includes all forms of income because of two important reasons;
We believe that this is common sense but we understand that we may be wrong.
The commercial decision of the employer is to decide whether to adopt our view and if wrong be required to repay furlough pay that is found to be subsequently excessive or to furlough on lower salaries and risk the commercial loss of key staff who post Coronavirus leave the organisation.
The answer is no.
The current anecdotal information says that the portal might be up and running by 30 April with payments released at the end of May.
Accordingly, we understand that the Government and banks are in discussions which will enable banks to “extend finance” to companies to pay furloughed wages and then recover the money from companies when HMRC process the payments.
Watch this space for further news.
In order to make a claim, an employer must;
Claims can be submitted every three weeks and make the claim in accordance with actual payroll amounts at the time when the payroll is run or is imminent
Employers must pay the employee the entire grant received subject to the PAYE and pension deductions.
HMRC will retain full rights to retrospectively audit all aspects of a claim.
Finally, Coronavirus Job Retention Payments are a grant, not a loan. They should be recorded as additional income of the accounts and CT 600 of the business.
You can furlough all, some or none.
Most dealers have furloughed the majority of staff keeping only a skeleton office staff to manage finance and web profiling, the latter to keep in contact with customers as opposed to selling cars or services.
VAT refunds will be processed in the normal way and will be unaffected by Coronavirus though the payment may be a little later than normal.
No, it is all or nothing.
If you need people to work you should organise for employees to work full time and pay them accordingly.
You cannot defer furlough payment PAYE but you can apply to defer the PAYE due in April following payment of March’s payroll.
You must contact HMRC to do so, either on the HMRC coronavirus helpline or in writing if you are unable to get through.
Employee employment rights are unaffected by being furloughed.
There are no specific provisions.
A director of a company is employed.
No.
The decision to furlough people is entirely up to the company.
Most dealerships have already closed, very few are open and where they are, it is service departments only and many of these are closing.
Yes.
Once a person is fit and able to work, he or she is then eligible to be furloughed.
They will have broken the terms of their employment and the employer could terminate their employment and remove them as furloughed staff.
However, I am sure that exceptions will be made if staff volunteer to carry out work to assist charities, NHS or similar during this crisis even if they receive a small reward for their efforts.
All motor dealerships are eligible for furlough payments (grants).
All motor dealerships are eligible to receive loan support.
The Government has made available loan support in two categories, those with turnover under £45m and those above.
Businesses must contact their bank to pursue such funding.
Anecdotal evidence notes that banks are swamped with enquiries and reports are being passed on hat the banks are “pushing back” and are unwilling to lend to only the very best and most robust businesses.
This may be a little unfair of the banks who have neither the systems nor resources to cope with unprecedented demand.
Critics, and there are many, say the arrangements are not suitable for purpose as they presently stand. This may be so and therefore it is expected that the Government will be working with banks to try to alleviate the issues that have not allowed funding to flow as was hoped.
We are expecting further guidance tomorrow from the Chancellor.
The retail business rate relief applies to showrooms only and not to non-retail premises or parts thereof.
Local authorities should be writing to businesses to advise them of these rules.
There is no requirement to pay the additional sum.
Some employers will, some will not because they choose not to do so or because they cannot.
No, it is all or nothing.
No, it is all or nothing.
Dealerships should retain a limited skeleton staff to handle enquiries.
To be furloughed an employee cannot take part in the delivery of a service or generate an income.
Accordingly, continue to train, where possible, is not considered to be a reason for furlough payments to be withheld; indeed it would seem a very good use of available time.
The rules allow furlough claims every three weeks so there would appear to be no reason why this is not possible.
ASE Comment
We hope that the answers given help you assess how you should manage your business and in particular your staff.
If you have additional questions which have not been addressed above please contact Chris Cummings on 07896 117908 or by email chris.cummings@ase-global.com
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