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Can a director be furloughed?

28 March 2020
Mark Friend
COVID-19, Accounting & Compliance, Payroll, People

This is the big question we are currently being regularly asked.

The official guidance has now been published and as office holders, salaried company directors are eligible for support through the Coronavirus Job Retention Scheme, provided they are simply mothballing their businesses and just looking to prepare company accounts, maintain books and records. The activities carried out by these furloughed directors must be no more than would be judged reasonable for the purposes. Therefore they should not do work of any kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.

This guidance also applies to those salaried individuals who are directors of their own personal service company.

In our opinion, the director is therefore precluded from spending any time working on improving the business (e.g. developing the website, developing and improving systems etc…) so that when trading recommences the business can perform better than before or carries out any actual work to generate income this would prevent the director from being furloughed.

Whilst the subsidy isn’t a lot of money for many directors (typically 80% of £719 – dividends don’t count) every little helps when you have nothing coming in.

If you are a client and believe you qualify for furloughing and we have not discussed this already please contact us urgently.

This information is correct as at 6 April 2020 and is our understanding of this policy and how this will work based on the information published so far.

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