Taxman Claws back Furlough

HMRC and the National Audit Office has recently estimated that between 5-10% of the total furlough money claimed throughout the Coronavirus pandemic could have been over-claimed, and small business owners are unaware.

Over £70 billion will have been spent on the furlough scheme when it ends on the 30th September, which is nearly double the total UK defence spending in 2019/20. At its peak, 8.9 million people were on furlough, but the latest figure has dropped down to only 1.9 million.

You can read the National Audit Office’s full report on Covid-19 support spending here.

It has been advised for all small businesses to check their furlough claims in detail to ensure they are not accidentally making any errors, as all incorrect claims will be pursued by HMRC over the next few years.

One of the most common errors made have been forgetting to work out claims for flexible furlough on calendar days and instead using working days, of which there are only 260 per annum.

What do you do if you have over claimed?

If you already know you have over claimed you should notify HMRC.

How do you repay overclaims?

Any furlough overclaims can be repaid through the Government’s website before HMRC hits you with interest and penalties.

You can correct it in your next claim, meaning your new claim will be reduced and you’ll need to keep a record of the adjustment for 6 years, or you can get a payment reference number and pay HMRC back within 30 days.

You can also make a voluntary payment if you do not need or want the grant to pay your employees’ wages, tax and National Insurance and pension contributions.

How do you correct overclaims in your next claim?

To repay in your next claim you must:

Work out your claim amount as you normally would, without any details over the overclaim.
Work out how much you have over claimed by.
Deduct the amount you have over claimed from the original claim amount.
Enter the result in your ‘claim amount’ box on your claim form.
Enter the amount you’ve over claimed in the ‘overclaim’ box

For example if you have claimed £5,000 and have over claimed £1,000, you should enter £4,000 in the ‘claim amount’ box and £1,000 in the ‘overclaim’ box.

You can pay online, telephone banking, CHAPS and Bacs.