COVID-19: Construction industry furlough claims rejected

COVID-19: Construction industry furlough claims rejected as ineligible.

Why are claims by construction companies for furloughed staff being rejected as ineligible?

One of the qualifying criteria for claiming 80% of the salaries of furloughed employee under the Coronavirus Job Retention Scheme (CJRS) is that the employer must have operated a PAYE scheme prior to the 19th March 2020.

PAYE/Construction Industry Scheme (CIS) Anomaly

HMRC operates two PAYE schemes for construction companies: Subcontractor Only and the hybrid Subcontractor/PAYE scheme.

Subcontractor Only PAYE Scheme – Ineligible for CJRS Grant

Construction companies which fall under the Subcontractor Only category are automatically rejected as ineligible when applying for the CJRS grant. This is despite the fact that these companies have been running employee payrolls for several years.

Construction industry furlough claims rejected

Subcontractor Only / PAYE Scheme – Eligible for CJRS Grant

All is not lost. Construction companies that have been rejected as ineligible for the CJRS grant can contact HMRC’s Employer Helpline on 0300 200 3200 and request that their PAYE scheme be modified to the hybrid version: Subcontract Only / PAYE.

Once HMRC has updated their system, the construction companies affected can re-apply for the grant after 72 hours.

Hector has his limitations

Despite the multiple qualifying criteria listed by the government for making a CJRS claim, Hector has decided to keep things Plain Vanilla for the construction industry by limiting his checks to whether the company’s PAYE scheme is Subcontractor Only or not.

Hector has no time for Tutti Frutti logic like IF PAYE Scheme equals Subcontractor Only and Company runs Payroll then Eligibility is TRUE.

To be fair, Hector is only a tax inspector and not an IT programmer.

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