07 Apr 2020
HMRC has published eagerly awaited guidance with regard to the Coronavirus Job Retention Scheme (CJRS) and the position of company directors.
Directors who are paid a salary through PAYE do qualify for the CJRS and so can be furloughed provided:-
A director, like any other employee who has been furloughed, cannot continue to work as would be expected in normal circumstances, i.e. they cannot be involved in generating revenue or providing services to or on behalf of the company.
HMRC have clarified however that a Director is entitled to discharge their statutory duties provided that they “do no more than would reasonably be judged necessary for that purpose”.
This could include, for example, attending a Board meeting, ensuring statutory records are kept up to date and attending to statutory filings.
The CJRS is open to directors of personal service companies (PSC) where a salary is paid to that director, which will be welcomed by many individuals who utilise PSCs to provide their services.
In some cases, directors who are also shareholders of a company receive remuneration by way of a dividend and it should be noted that the CJRS is limited to salary paid through PAYE only and so will not cover this income.
Companies will need to be careful to adhere to these rules or else risk being ineligible for grants being sought for directors.