Employers who furloughed employees in March and early April are spending this week getting up to speed with two sets of additional government guidance issued on 9 April and on 15 April. To make their first claim when the portal opens by the end of April, employers are preparing calculations which, for variable-pay employees or those furloughed during part-pay periods, are not necessarily straightforward.
A major concern is that employers must have a PAYE online account in order to make a claim. Many employers are only now realising how crucial this is, particularly those that outsource their payroll operation to a tax or payroll agent, and don’t have a PAYE online account.
Organisations who furloughed employees in March did so on the understanding, from the initial HMRC guidance, that if they had a UK bank account and an operational PAYE scheme that was sufficient to be able to make a reclaim in due course.
Employers using a payroll bureau or tax agent perhaps think this isn’t a problem as their agent will have access and they can ask them to help submit the furlough claim. As employers will find out when they start contacting their agents this is not often the case as many are file-only agents. These do not have sufficient access to submit the furlough claim on behalf of the employer.
With a reported 2 million PAYE schemes in UK, it is not clear how many have PAYE online access. So what can organisations do now if they don’t have access?
Affected employers must enrol separately for HM Revenue and Customs’ (HMRC) PAYE Online service if they didn’t receive login details when they first registered as an employer.
In order to do this, they’ll need the PAYE reference and Accounts Office reference - these are included in the letter from HMRC confirming the registration.
How the employer enrols depends on whether they already have an online account for other taxes, eg Corporation Tax or Self-Assessment. If they already have an account then log in to HMRC Online Services, then select the option to enrol for ‘PAYE for Employers’ under ‘Services you can add’ and enter the details.
If the employer doesn’t have an account, they need to enrol as a new user by selecting ‘PAYE for Employers’ under ‘Organisation’ and following the steps. They’ll get a letter in the post within 10 days of enrolling - this will include the activation code. This will go to the organisation/trading address so the employer will need to make sure someone has access even in lockdown and is able to pick it up.
With the code provided the employer must log in to HMRC Online Services again within 28 days or it will expire. Once access is available the furlough grant can be claimed.
The clear statement on 9 April that a PAYE online account is needed will likely be an unwelcome surprise to many organisations and could push some over the brink if there is a delay in funds being paid.