10% of Furlough Claims made Incorrectly

After a year and a half of supporting employers through the pandemic, the Furlough scheme officially ended on the 30th of September.

Whilst the scheme was a great help to many businesses throughout the pandemic, some have been left in limbo with the removal of the funds, and others may be at risk of fraud probes and fines due to miscalculated applications.

What is the problem?

A recent survey from Grant Thornton, a business and financial advisor, found that 16% of businesses who claimed furlough never reviewed their initial claims and never checked if they were correct. This unfortunately means that if any were incorrectly made, they are fraudulent claims.

Whilst £1.3 billion in furlough money has already been returned, this is less than a third of the total the government were expecting and will need to recoup from UK businesses. They have estimated that up to 10% of grants may have been claimed incorrectly – due to miscalculations or deliberate fraud. To tackle this, HMRC has increased their Taxpayer Protection Taskforce to over 1250 investigators.

It is recommended to all who received a furlough grant throughout the pandemic to revise their claims, ensuring you will not be at risk of investigation and penalty.

Why might you have claimed incorrectly?

Throughout the furlough scheme, there were a number of changes made. Some important changes to note are that the furlough scheme became flexible on the 1st July 2020. From March – June 2020, you could receive a grant reclaim value of 80% of a furlough employee’s wages, with a cap of £2,500 per person per month, plus NI and minimum pension contributions. After this date, employers were responsible for topping up more of their employees’ wages.

You could have also miscalculated due to mistakes or errors made in your application process, such as an error in your payroll software, miscommunication between staff, mistakes made in relation to National Insurance and pension calculations, or staff continuing to work when on furlough.

To ensure you haven’t made any mistakes, go back to the initial claim you made and work your way through to identify any discrepancies.

What to do if you have miscalculated

If you notice a discrepancy yourself, you should reach out to HMRC, even if they haven’t contacted you yet, to ensure you don’t fall under deliberate fraud suspicions.

If you receive a letter from HMRC, make sure to correspond with them directly via the contact details provided.

If you fail to report any discrepancies or respond to their communications, there is every possibility the Government will publicly call out your company. Even if your business is now insolvent, you could be held liable for any amounts overclaimed, so it is in your best interest to actively approach the issue.

If you’re unsure, then make sure to reach out to us so we can help you with this process!