Businesses pay back £1.3 billion of furlough

Businesses have paid back £1.3bn worth of furlough cash with £300m returned in the last three months alone official statistics reveal. 

The figures released today show the businesses that have overclaimed or decided they no longer need payments received through the coronavirus job retention scheme (CJRS) have handed the cash back to HMRC through adjustments to claims and the voluntary disclosure service.

The total amount repaid since July 2020 is shown, with further repayments expected when employees return to work and the economy improves.

With businesses reopening, the number of people on furlough has fallen to the lowest level since the start of the Covid-19 pandemic with 340,000 people moving off the scheme in July leaving 1.6m people recorded as still receiving furlough payments. The scheme ends on 30 September.

How many jobs are protected by the furlough scheme?

The government reports that the furlough scheme protected almost 12m jobs and supported more than 1.3m with 910,000 jobs in Scotland protected, 470,000 jobs in Wales, and 280,000 jobs in Northern Ireland. The cost of the scheme is just under £70bn according to recent figures.

HMRC targets employers in furlough fraud crackdown

HMRC is also cracking down on those who fraudulently claimed furlough through a £100m taxpayer protection taskforce which has a team of 1,250 tax investigators following a recruitment drive launched in March.

The tax authority is conducting around 30,000 checks as it shifts from a stance of focusing on compliance and support to one of stricter enforcement with the hope of recovering over £1bn worth of fraudulent or mistakenly claimed furlough money over the next two years.

This is probably the first time that businesses have voluntarily repaid government funding in such large numbers, often after coming under sustained media pressure, particularly in the case of some retailers.

The government has estimated that up to 10% of furlough claims have been made incorrectly, with fraud suspected to make up a significant proportion. To date, only five people have been arrested for furlough fraud.

Some of the repayments will be the correction of errors, but the majority is likely to be businesses deciding to repay funds after finding that they had done better than expected during the pandemic.

However, there is clear concern from the government about incorrect and potentially fraudulent payments – and HMRC will not hesitate to pursue those who have been abusing the scheme.

Companies may have inadvertently claimed for more than they were due or simply made a mistake in their calculations but now is the time to check. If companies do discover an error, it is nearly always better to correct it voluntarily before HMRC starts to investigate as penalties are lower and often nil, if the initial disclosure is unprompted. If an investigation is started it could cost companies dearly.’