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Businesses have voluntarily repaid over £760m in furlough money to HMRC

Publications featured in include: Accountancy Daily, People Management, Accountancy Today, City AM and The i. 

•   HMRC’s new Covid taskforce could lead to crackdown on businesses who wrongly claimed grants

It’s likely that many of these businesses claimed furlough money in the early stages of the pandemic as a precaution in case they ran into financial difficulties. However, many of these businesses later realised they weren’t impacted as badly as they first anticipated.

Although there is no specific 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 impacted by the pandemic and have been unable to maintain their workforce. 

It is believed that HMRC is now shifting its focus towards businesses who have incorrectly claimed furlough money, which could encourage more to make voluntary repayments to reduce risk. 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.

Neela Chauhan, partner in our London office, says: “Many businesses are beginning to realise they acted hastily when claiming furlough money and are doing the right thing by handing it back to HMRC.

It’s expected that HMRC’s Covid fraud taskforce will take a much tougher approach to tackling what it sees as abuse of its schemes. It has taken a ‘softly, softly’ approach so far 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.”

There are steep penalties for businesses that deliberately claim furlough grants they are not entitled to. If they do not notify HMRC of the grant they overclaimed, it will be considered as a ‘deliberate and concealed’ activity, which can lead to a penalty of up to 100% of the grant.  

Since the introduction of the furlough scheme in March 2020, £53.8bn has been claimed by employers and it has protected over 11 million employees. In the March Budget, the Government also announced the scheme would be extended until 30 September 2021. 

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