HM Revenue & Customs (HMRC) updated guidance under the job retention scheme (JRS)—a program established to provide economic relief to businesses as they support employees with payments as a response to the coronavirus (COVID-19) pandemic—to reflect anticipated changes.
The changes appear to concern the introduction of language that revises what employers must do when calculating a claim if an employee stops being furloughed, or flexibly furloughed, partway through a claim period.
Calculating the number of working and furloughed hours for an employee that comes off furlough or flexible furlough partway through a claim period. If your employee stops being furloughed or flexibly furloughed partway through a claim period, when calculating the number of furloughed hours you can claim for, make sure you:
This applies even if your claim period includes days after the employee’s last day of furlough (for example, because you’re claiming for multiple employees and some of them stay on furlough).
You do not need to amend any previous claims submitted prior to 14 September 2020 for these employees. You should use this calculation for any claims from 14 September 2020, for an employee who stops being furloughed or flexibly furloughed partway through a claim period.
HMRC’s updated guidance does not specify what “come off” furlough means, nor does it address whether having come off furlough, it is possible in HMRC’s view, to go back on furlough. Similarly, it is not immediately clear whether any employees who might have been disadvantaged under the old approach, could compel their employer to amend historic claims. It may be that until HMRC confirms these points, it may be likely that this will depend on the legal documentation and communications that were given to employees.
In principle, this is a welcome simplification. However, employers must confirm the specific implications for them based on the wording of their own flexible furlough agreements and any other correspondence with employees who return to work.
Read a September 2020 report prepared by the KPMG member firm in the UK
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.