Following the HMRC guidance on making claims under this second version of the scheme, many professional bodies and advisers contacted them to explain that you could only make one claim a month where you had a mix of employees on different pay periods – eg, weekly and monthly. This meant that usual and furlough hours were required, and that for those who were variable paid employees, this was producing some low claimable amounts, particularly where in the first week back they worked extra hours in order to get the work places fit to open.
HMRC guidance was very clear - if an employee was fully furloughed for the whole claim period, usual hours and furlough hours were not needed. Interestingly this doesn’t match the Treasury Direction, which requires them in every case.
In a dramatic U-turn on Friday 11th September HMRC updated its guidance for the fifth time.
The update includes a new section entitled ‘Calculating the number of working and furloughed hours for an employee that comes off furlough or flexible furlough partway through a claim period’. The change is that, when calculating the furloughed hours that can be claimed, you should now only use the usual hours, up to and including the last day of furlough (or flexible furlough). It states this guidance MUST be used for claims from 14 September 2020, but there is no requirement to correct claims prior to this date. Some employers may need to correct though, particularly if it means they can now claim more, depending on what the furlough agreement they reached with the employee said. This will apply if they have committed contractually to pay the staff the amount they may be able to claim as furlough. Where they do seek to claim more, they will need to contact HMRC.
And if that wasn’t enough, there is a line in the guidance which says ‘Where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates’.
So, employers will need to be sure the employee has permanently come off furlough and gone back to work normally – they are not going to be furloughed again.
With the increasing number of local lockdowns, what happens when all staff return on, say, 28 September 2020 with the intention of returning to employment. Then, the business is affected by further restrictions, and is forced to furlough staff again on 12 October 2020. The claim for September will have ended on 28 September, but restarted on 12 October – a gap, and two separate claim months where the employee was not fully furloughed (assuming that the employer is making monthly claims). Such a scenario would lead to more confusion for those making claims now for September and October.
This has already caused employers problems when drafting furlough agreements covering what employees would be paid when on furlough, and to make changes like this 2.5 months into the flexi-furlough part of the scheme, and with only 1.5 months to go, is astonishing.
In fact HMRC has been constantly updating its step-by-step guidance, 113 changes at the last count (on 14th Sept) and the HMRC’s calculator too. How does all this change sit with HMRC telling employers to correct and notify any mistakes in order to avoid penalties?