The latest Guidance on the CJRS provides:
“A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.“
Also under sections 71 and 76 of the Coronavirus Act 2020 the Chancellor of the Exchequer has issued a Direction to HMRC on the operation of the Coronavirus Job Retention Scheme.
For the purposes of TUPE, summarised below are the most important points which are set out in §§9 to 11 of the Direction.
To understand these points the reference to a “qualifying PAYE scheme” is a PAYE scheme registered on HMRC’s real time information system for PAYE on 19 March 2020.
The Direction deals with two scenarios.
First, (see §§ 9.1 to 9.3), is where the new employer (transferee) has no qualifying PAYE Scheme solely because its PAYE scheme was registered on the HMRC real time information for PAYE after 19 March 2020.
If: (i) an employee was on the payroll of the transferor on 19 March; (ii) the transferor has a qualifying PAYE scheme, and; (iii) there is a transfer after that date then the employee will qualify if:
- Reg 102 of the PAYE regulations applies – i.e. the transfer is not treated as a cessation of employment.
- TUPE applies so that the employment does not terminate on transfer .
- The transfer does noes not operate to break the continuity of employment.
Second, (see §10), is where the new employer (transferee) already had a qualifying PAYE Scheme before 19 March 2019
If the transferee employer does not qualify to make a claim under §§9.1 to 9.3 of the Directions solely because it already had a qualifying PAYE Scheme then the entitlement to claim under the CJRS is determined as if the transferee employer had made earnings payments to the employee in the 2019-20 tax year shown on the real time return on or before 19 March 2020.
Comment
Previously the position under the Guidance v3 was that the CJRS applied to employees who transferred after 28 February 2020. Now under the Treasury Direction and Guidance v4 the Scheme applies to transfers after 19 March 2020. If an employee transferred on or before the 19 March 2020 then they will be on the transferee’s payroll on that date (assuming real time data had been provided) and therefore be a relevant employee for the purposes of the CJRS.