Taking too long? Close loading screen.
Get An Instant QuoteGet A Quote

Company Directors & Shareholders. Many small companies are run by just one or two directors and have no other employees. What government financial support is available to directors/shareholders during the coronavirus crisis?

  • A director or company officer is an employee for PAYE purposes.
  • A director cannot claim the COVID-19 Grant for the self-employed by virtue of holding the office of a director.
  • Directors can be furloughed under the COVID-19 Coronavirus Job Retention Scheme (CJRS).
  • There are potential issues for small companies to consider.
  • The government has temporarily suspended the wrongful trading in insolvency rules in order to allow companies to have a breathing space during the virus crisis.

If the director’s company is adversely affected by COVID-19, the director has the following options, depending on the circumstances:

Potential Insolvency

  • The government has announced that it will temporarily suspend the wrongful trading rules, backdated to 1 March 2020.

Joint and several liability of directors for deliberate claims under CJRS where company not eligible

Finance Act 2020 includes provision to make a company officer jointly and severally liable for Income Tax assessments raised on CJRS payments where:

  • that officer deliberately made a CJRS claim where the company was not eligible and the company is insolvent, or
  • HMRC can show there is a serious risk that the company will not be able to pay the Income Tax assessment.

Furloughing

Furloughing for normally employee type duties:

A director who was on the payroll and engaged under an existing written or verbal employment contract on or before 19 March 2020 ( prior to 15/04/2020 this date was 28 February 2020) may be furloughed if they meet the conditions of the scheme.

HMRC guidance says that where a company board decides to furlough a director, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director being furloughed.

Can you furlough a sole director?

A sole director company will probably not wish to furlough a director in respect of their statutory duties. This is because a company cannot operate without its director and all directors have ongoing fiduciary duties to their companies.

A sole director company may furlough the director in respect of their employment duties

Potential Issues

Most companies will need to have someone on hand, to handle on-going administration such as post, bookkeeping, tax filings and banking. These kinds of duties can be performed by a director in his statutory capacity.

A company can go into a ‘COVID-19 hibernation’ meaning that the director would have no day-to-day employment type duties during that period. From 1 July flexible furloughing means that part-time work can be undertaken with claims being adjusted accordingly

If you have two directors then one could be totally furloughed leaving the other in charge of statutory obligations

Pin It on Pinterest

Get An Instant Quote