In this month’s update we look at changes to eligibility for the CJRS applicable from 1 May 2021 which may mean claims can be made for more recent employees, the opening of SEISS 4 last month and a reminder about the next deadline for VAT deferral.

The CJRS

Eligibility from 1 May 2021

If an employer has employees who were previously ineligible for the CJRS as they were not on payroll at 30 October 2020, they may be eligible for periods from 1 May 2021 onwards.

From 1 May 2021, employers can claim for eligible employees who were on their PAYE payroll on 2 March 2021. This means they must have made a PAYE Real Time Information submission between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.

Employers and their employees do not need to have benefitted from the scheme before to make a claim, as long as they meet the eligibility criteria.

Changes to calculation of average wages from 1 May 2021

For periods from 1 May 2021, when calculating the average wages for employees who are not on a fixed salary, employers should no longer include periods of:

• statutory sick pay related leave;
• family related statutory leave; or
• reduced rate paid leave following a period of statutory sick pay or family related leave.

However, if an employee was on one of these types of leave for the entire period used to calculate their average wages, then the employer should continue to include the days and wages related to that leave.

Forthcoming deadlines

The deadline to submit CJRS claims for periods in May 2021 is Monday 14 June 2021, unless reasonable excuse is available for late submission. Amendments to April 2021 CJRS claims must be made by Friday 28 May 2021.

Check if your client and their employees are eligible and work out how much they can claim using HMRC’s CJRS calculator and examples.

Guidance changes

HMRC has also updated the guidance as follows recently:-

Frequently asked questions about the CJRS

HMRC has also sent the below answers to FAQs on the CJRS.

“Can employers still use the CJRS if they’re starting to re-open their business?

Employers can continue to use the CJRS if their business is affected by coronavirus. They don’t need to place all their employees on furlough. They can also use the CJRS flexibly to bring their employees back to work for some of their usual hours. They can claim for a portion of the usual wage costs for the hours spent on furlough.

Can a CJRS grant be used to pay for holiday leave?

If employers have furloughed employees because of the effects of coronavirus on their business, they can claim under the CJRS for periods of paid leave their employees take while on furlough, including for bank holidays. Employers should not place employees on furlough just because they are going to be on leave.

If an employee is furloughed for only some of their hours, employers can count time taken as holiday as furloughed hours, rather than working hours. This means employers can currently claim for 80% of their employee’s usual wages when they’re on leave.

In line with the Working Time Regulations, if a furloughed employee takes holiday employers should make sure they are calculating the correct holiday pay, and not simply continuing to pay the 80% they receive through the CJRS. They may need to top up their employees’ pay to 100% of their normal hourly rate or salary. You can find more information on GOV.UK.”

SEISS grant 4 is here

Opening of claims for grant 4

The online service for claiming under the latest phase of the Self-Employment Income Support Scheme (“SEISS”) opened last month for applications for grant 4. HMRC has been contacting eligible taxpayers to give them a personal claim date, from which they can make their SEISS claim. Taxpayers can make their claim from their personal claim date until 1 June 2021.

Taxpayers are also reminded that they are required to keep appropriate records as evidence of the impact on their business. If this is a taxpayer’s first time claiming a SEISS grant, they may be asked additional questions to prove their identity.

Non-eligible taxpayers

HMRC has contacted taxpayers who previously claimed SEISS support but are no longer eligible. There are a number of reasons for ineligibility, for example:

• not filing their 2019/20 Self-Assessment return on or before 2 March 2021;
• if the information on their 2019/20 Self-Assessment return means they no longer meet the eligibility criteria, or
• if they’ve permanently ceased trading.

If a taxpayer believes that HMRC has incorrectly assessed their eligibility, or the amount of their grant, they should follow the advice provided in the email or letter sent.

Agents

Tax agents should not submit review requests on behalf of their clients, as this can lead to delays. HMRC will only discuss SEISS claims with the individual taxpayer.

As with previous SEISS grants, tax agents cannot make a claim on behalf of their clients, or use their log in details, as this will trigger a fraud alert and result in delays to their client receiving payment.

Grant 4 eligibility

In order to claim the fourth grant, taxpayers must reasonably believe that they’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2021 and 30 April 2021. They must keep evidence that shows how their business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC expects taxpayers applying for SEISS 4 to make an honest assessment about whether they reasonably believe their business will have a significant reduction in profits.

Before making a claim, a taxpayer must decide if the impact on their business between 1 February 2021 and 30 April 2021 will cause a significant reduction in their trading profits for the tax year they report them in.

Taxpayers do not have to consider any other coronavirus scheme support payments that they have received when deciding if they’ve had a significant reduction in their trading profits. HMRC has provided some examples that taxpayers can use to help them make the decision.

Amendments to 2019–20 SA returns after 3 March 2021

If a taxpayer makes, or has made, an amendment to their 2016/17, 2017/18, 2018/19 or 2019/20 tax return on or after 3 March 2021, HMRC must be notified within 90 days if the amendment either:

• lowers the amount of SEISS grant the customer is eligible for; or
• causes the customer to no longer be eligible for a SEISS grant.

The taxpayer may need to pay back some or all of the grant. If HMRC is not notified, HMRC will make contact after the deadline for making amendments to tell them what amount they may need to pay back. If HMRC is not notified within 90 days, a penalty may also be payable.

HMRC does not need to be notified if either:

• the amount they’re eligible for is lowered by £100 or less; or
• they are no longer eligible and the grant they received was £100 or less.

Eligibility for parents

Parents may be eligible even if they have taken time off, provided they meet the specific eligibility criteria.

If having a new child has affected a taxpayer’s 2019/20 tax return, HMRC may consider their eligibility in a different way. This would apply where a taxpayer’s trading profits or total income in their 2019/20 tax return meant that they did not meet the eligibility criteria for the grant, or they did not submit a tax return for 2019/20.

For new parents who did not submit a 2019/20 Self-Assessment tax return, HMRC will assess eligibility using an average of the applicable 2016/17 to 2018/19 tax returns.

For parents to be eligible for SEISS 4 they must be a self-employed individual or a member of a partnership. Their average trading profits across their applicable 2016/17 to 2018/19 tax returns, must be no more than £50,000 and at least equal to their non-trading income. They must be currently trading but are impacted by reduced demand due to coronavirus or have been trading but are temporarily unable to do so due to coronavirus.

VAT deferral – next deadline

The VAT deferral new payment scheme opened in February for businesses who deferred VAT due between 20 March 2020 and 30 June 2020 and still have payments to make, or who are unable to pay in full by 31 March 2021. This includes those on Payment on Account and Annual Accounting schemes. Businesses must apply on or before 21 June 2021 if they want to join the scheme and further defer this VAT.

The later businesses join the fewer instalments are available to them. The next deadline to apply by is Wednesday 19 May 2021 to benefit from making the payment over 9 instalments. Following that the final deadline to apply by is Monday 21 June 2021 which will allow payment over 8 instalments.

Failure to make payment of the deferred VAT in full or to make an arrangement to pay by 30 June 2021 may result in a 5 percent penalty, according to the guidance.