Furlough cash: Businesses repay £760m as HMRC cracks down on fraudsters
A total of 3,777 businesses have repaid over £760m in furlough grants to HMRC, according to new data shared with City PM this afternoon.
Since the introduction of the furlough scheme in March 2020, £53.8bn has been claimed by employers as it protected over 11m employees, said accountancy firm UHY Hacker Young, who compiled the numbers.
In the March Budget, the government announced the scheme would be extended until 30 September of this year.
Grants for jobs
Although there is no legal requirement for a business to demonstrate that they have been financially impacted by Covid-19 in order to claim furlough grants, the scheme is intended to support those that have been badly affected by the pandemic and are unable to maintain their workforce.
Many businesses claimed furlough money in the early stages of the pandemic as a precaution in case they ran into financial difficulties, said UHY Hacker Young.
However, most of the businesses that repaid grants later realised they weren’t impacted as badly as they first anticipated and did not need the emergency cash.
Crackdown
In recent weeks, HMRC shifted its focus towards businesses who incorrectly claimed furlough money, which could encourage more firms to make voluntary repayments to reduce risk, UHY Hacker Young said.
In the March Budget, the government announced it would be allocating over £100m towards a new HMRC taskforce dedicated to investigating fraudulent claims under its various Covid support schemes.
“Many businesses are beginning to realise they acted hastily when claiming furlough money. It is expected that HMRC’s Covid fraud taskforce will take a much tougher approach to tackling what it sees as abuse of its schemes,” said Neela Chauhan, partner at UHY Hacker Young.
“So far, HMRC has taken a ‘softly, softly’ approach by issuing nudge letters to those it suspects may have claimed furlough money incorrectly, encouraging them to hand back money voluntarily if necessary. The next stage of its investigations will be much more aggressive,” she told City PM
There are steep penalties for businesses that deliberately claim furlough grants they are not entitled to. For example, if a business does not notify HMRC of the grant it overclaimed, it will be considered a ‘deliberate and concealed’ activity, which can lead to a penalty of up to 100 per cent of the grant.