Ltd Co, 2 Director employees - Is running 'Payroll' considered an admissible function in furlough?

Jeremy535897

Andy_L said:

"Company directors owe duties to their company which are set out in the Companies Act 2006...Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company."

and the statuatory duties are: http://www.legislation.gov.uk/ukpga/2006/46/part/10/chapter/2

one of which is "have regard to the interests of the companies employees" I'd suggest that being paid is in their interests

Yes, in the section headed "duty to promote the success of the company", which also contains things they aren't supposed to do, like the need to foster business relationships.

Hermann

Surely the simplest thing is just to have one day back at work a month to do the payroll and any thing else that needs doing. Or even a few days if you want to phone round or send emails etc.

Missing one day's furlough pay shouldn't be too financially onerous and ensures you're on the right side of the guidance which protects the rest of the months furlough claim.

The scheme has been designed to make that possible and straightforward to do therefore I'd suggest that's the way its anticipated such tasks will be achieved. 

Eloceo

Thanks Andy, good reference.
Neil, My AofA are pretty generic in terms of duties and given the size of the company (2).  Discussing with several other similar size company colleagues, theirs are pretty similar (off the shelf) A of A's.So, I don't think we're that unusual in not having a specific duty of running the payroll incorporated in the directors duties of office, but it is a good point you make

Jeremy535897

In the schedule to the Treasury direction setting out the legal text for the CJRS's operation, paragraph 6.6 says:
"Work undertaken by a director of a company to fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company must be disregarded for the purposes of paragraph 6.1(a)."
6.1(a) says:
"An employee is a furloughed employee if- (a) the employee has been instructed by the employer to cease all work in relation to their employment,"
It seems to me that the running of payroll, and a claim under CJRS, could fall into the words I have highlighted in bold above.

The full document is at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf
and is part of this release:
https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020

rjwb

neilmcl said:

rjwb said:

We are also a 2 director company and had a similar discussion as we are are going to furlough ourselves from 1 May. (Our employees already furloughed.) Our view was that we would do whatever was necessary to keep the business ticking over, including speaking to clients and prepping for future jobs, as long as it didn't directly generate revenue. Otherwise there will be no business to come back to when furlough ends, so we may as well wind it up now and make everyone redundant and not have to worry about their furloughing rules.

If the HMRC really have the time to object then fine, take the money back, we'll then almost certainly go into liquidation. 2 directors + 3 employees then have to apply for universal credit, so it still costs the govt/taxpayer in the end.

No! This is exactly what you shouldn't be doing, putting out feelers or even posting on social media in an official capacity could well be seen as tasks or services for the company which is outside the scope of what you're allowed to do whilst furloughed. 

I understand your position but, if I followed it, there will be no business to come back to... I certainly won't be posting on social media or indeed putting anything in any written form. I'm not that naive!!

unholyangel

Jeremy535897 said:

In the schedule to the Treasury direction setting out the legal text for the CJRS's operation, paragraph 6.6 says:
"Work undertaken by a director of a company to fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company must be disregarded for the purposes of paragraph 6.1(a)."
6.1(a) says:
"An employee is a furloughed employee if- (a) the employee has been instructed by the employer to cease all work in relation to their employment,"
It seems to me that the running of payroll, and a claim under CJRS, could fall into the words I have highlighted in bold above.

The full document is at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf
and is part of this release:
https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020

I think perhaps you're overlooking that there needs to be an act of parliament. I'd also point out that company administration (as per s193 of the companies act 2006) relates to insolvency. But even if it mean administrative tasks, I would suggest it is referring to (for example) the requirements under the companies act to notify the registrar (companies house) of certain information. 

It's not a duty of a director to process payroll. It may be something they do (if they do not hire someone else to do it), but it's not within the duties of a director. 

I would suggest perhaps unfurloughing for a day or two to catch up with essential administrative tasks and then furlough 3 weeks in between, just to be safe. 

Jeremy535897

The relevant act of parliament for the CJRS grant application is Coronavirus Act 2020, sections 71 and 76.
 For RTI it is the act under which schedule A1 of the PAYE regulations is authorised. In the wording in bold I highlighted in my earlier post, I suggest that administration is given its ordinary meaning, as in the context the definition given in section 193 CA 2006 makes no sense, and is not referred to.

unholyangel

Jeremy535897 said:

The relevant act of parliament for the CJRS grant application is Coronavirus Act 2020, sections 71 and 76.
 For RTI it is the act under which schedule A1 of the PAYE regulations is authorised. In the wording in bold I highlighted in my earlier post, I suggest that administration is given its ordinary meaning, as in the context the definition given in section 193 CA 2006 makes no sense, and is not referred to.

No, its not. Because the coronavirus act does not place an obligation/duty on a director to do anything, and the sections you're quoting are in relation to temporary powers given to hmrc and signatures from commissioners of the treasury (so nothing to do with directors, payroll or CJRS at all). 

Neither is it under any PAYE statute. The schedule you're referencing only states what information should be included in an RTI submission, it is not stating that they need to make an RTI submission, much less how often they need to be made and that they need to be made by the director. Again, processing payroll may be something that some directors do, but it is not a duty/obligation of a director laid out in statute. 

As for administration - when they are speaking about duties/obligations of directors and those duties/obligations are set out in companies act, then it is by no means a leap for them to be applying the only definition given to it in the companies act. I'm not sure why you think it doesn't make sense - it's how courts will approach definitions. Firstly, how is it referenced in that act itself, are there any express definitions (ie "this has the same meaning as under x act" or "means xyz"). Only if all of that fails, will they look to apply the oridinary meaning. 

silvercar

Martin Lewis has posted a facebook video about this, admin tasks can be done by directors while furloughed. What you can't do is revenue earning work that your company would normally do. He calls it wiggle room, but he has checked with hmrc on this. Please don't try to be unnecessarily difficult. hmrc is trying to help people on this occasion.