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Deferring PAYE/NIC deductions for furloughed staff via HMRC COVID Helpline

If an employer has recently furloughed staff over the course of the current lockdown situation, then the chances are that the employer has received support from HMRC via the Coronavirus Job Retention Scheme (JRS).  If so, then you need to be aware of a recent development, should you need to explore deferral of payments or extended time to pay arrangements with HMRC Debt Management and Banking (DMB).

Initially, when deferring PAYE monthly payments, HMRC were content to defer the full PAYE monthly payment without much push back.

Under the terms of the JRS payments in support of furloughed staff, payments are to cover furloughed staff wages and any PAYE deductions on those wages.

HMRC therefore now expects employers to pay the net monthly PAYE in respect of their furloughed staff, as/when the monthly PAYE payment becomes due.

Before approaching HMRC DMB to defer any monthly payments of PAYE tax and NI deductions, you should first establish what element of the monthly PAYE relates to deductions from those staff wages where the JRS payment has been used and net this off. HMRC will expect this proportion of the PAYE monthly payment to be paid on time.

It is only the proportion relating to non-furloughed staff which HMRC are now considering for deferral.  Payments of PAYE deductions against the JRS supported furloughed staff will have to be either paid or dealt with under a separate time to pay arrangement.

The reality of the situation, is that it is quite possible that once the JRS payment was banked, then the employer no longer had the ability to recover those funds in the manner HMRC hope for. As a consequence, negotiating a separate time to pay arrangement might be the only realistic option to account for that liability.

It also appears that HMRC DMB staff are now manning the COVID Helpline in greater numbers, therefore be prepared to meet with a more robust officer when making these calls. Have all of the relevant details relating to the scheme and the payments outstanding. Consider a time to pay arrangement prior to making the call and scope out what could reasonably be afforded and kept to.

It is important to note, that time to pay arrangements can be renegotiated if dealt with in good time. Therefore if a previous arrangement is becoming unaffordable, call HMRC DMB to discuss options before the arrangement falls into arrears. Similarly, in the current climate HMRC DMB will expect certain time to pay arrangements negotiated in the lockdown, to be renegotiated shortly thereafter, once the financial impact of the lockdown has become clearer and the dust has settled.

If you would like to discuss any of the points raised here, please do not hesitate to get in contact.

FEATURING: Dave Wase
Dave joined PKF Francis Clark in October 2018 after a 27 year career working for HMRC. Working as part of the tax advisory investigations team,… read more
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