6th April 2020
HMRC have provided a further update (6th April 2020) confirming that Company Officers (Company Directors and Company Secretaries) can be furloughed under the Coronavirus Job Retention Scheme.
The advice is as follows: –
“As office holders, salaried Company Directors are eligible to be furloughed and receive support through this scheme. Company Directors owe duties to their Company which are set out in the Companies Act 2006. Where a Company (acting through its Board of Directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried Directors, the Board can decide that such Directors should be furloughed. Where one or more individual Directors’ furlough is so decided by the Board, this should be formally adopted as a decision of the Company, noted in the Company records and communicated in writing to the Director(s) concerned.
Where furloughed Directors need to carry out particular duties to fulfill 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, for instance, 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.
This also applies to salaried individuals who are Directors of their own Personal Service Company (PSC).”
This now confirms that furloughing is allowable as long as the Company Director or Secretary only undertakes work that falls into the category of ‘Statutory Obligations’. Statutory Obligations include the filing of the Company accounts and the filing of the annual Confirmation Statement.
For the majority of our clients we complete and submit the Confirmation Statement on behalf of the Company. We will continue to do this.
For the submission of Company accounts, we prepare these for the Company ready for Director approval. Companies House have agreed that Companies can apply for a 3 month extension to the normal filing deadline due to the impacts of the lockdown. Wherever possible we will apply for this extension to allow further time for the accounts to be completed, approved and then submitted.
As these areas of ‘Statutory Obligations’ are mainly controlled by us, Company Directors and Secretaries can be furloughed as the above work will require no input from Company Officers.
The furloughing of Company Officers needs to be noted in the Company Statutory Records. We can assist with this.
Once furloughed, Company Officers must then not undertake ANY of the following otherwise the furloughing will become nullified: –
- Any work which generates income for the Company
- Provide any services at all via the Company
- Prepare quotes for customers
- Send any business-related e-mails
- Undertake the bookkeeping for the Company
- Submit Company VAT Returns
- Sending to us your Company documents
- Update online social media (LinkedIn, Facebook, Twitter)
- Make bank payments to suppliers, employees etc.
- Send payroll information to their accountant
The period of furlough must be for a minimum period of 3 consecutive weeks.
The furloughing scheme operates until 31st May 2020 but may be extended if required. It may be possible to backdate the furlough for Company Officers to 1st March 2020 when the scheme became live where it can be shown that a Company Officer has not undertaken any work on behalf of the Company since this date.
HMRC reserve the right to audit claims for furloughed pay so please ensure that once furloughed that you do nothing.
Companies with more than 1 Company Officer can furlough all Company Officers and the above requirements then apply to all furloughed Officers.
If a Company has more than 1 Company Officer and it is not possible to furlough all Officers, a decision can be made to furlough as many Officers as possible leaving all responsibility with a smaller number of Officers.
If any of our clients wish to include Company Officers under the Coronavirus Job Retention Scheme please confirm this to us via e-mail (firstname.lastname@example.org) advising of who the furloughing relates to and when the furloughing commences.
We will then prepare the required Company Minutes for approval once we are operating as normal.