SCOTTISH businesses are being urged to engage with HMRC on Covid grants which were received in error.
Accountancy firm Henderson Loggie is strongly advising businesses in Scotland to be proactive in engaging with HMRC.
Covid help schemes have been a lifeline for many businesses throughout the pandemic. However, due to the speed at which these schemes were introduced, some businesses received grants which they were not actually entitled to.
A total of £81.2bn of taxpayers’ money was distributed in furlough payments aimed at job retention, Self Employed Income Support and the Eat Out to Help Out scheme.
The accountancy firm’s business recovery and insolvency partner Shona Campbell said: “It has been reported that the treasury is writing off £4.3bn of Covid help scheme cash.
“This means that HMRC expects to recover only £1 in every £4 of funds owed due to claimant errors or fraud. But just because HMRC is under pressure to recover all the taxpayers’ money distributed during the pandemic, it doesn’t mean they are not actively pursuing it.
“For businesses aware that they may have made a mistake in claiming grants, it can seem like the easy thing to wait and see what happens. Claimants who have received money they were not entitled to cannot afford to stick their heads in the sand and hope the problem goes away.”
HMRC have announced that payment plans can be agreed for businesses who are struggling to meet their repayment obligations.
Campbell continued: “HMRC will agree affordable repayment plans for businesses struggling to meet their obligations, and early engagement with them will be beneficial. Although enforcement of insolvency is not the preferred route, there will still be instances where it could happen.
“Anyone facing these issues can save time and money, and possibly their businesses too, by seeking advice from professionals with experience of liaising with the tax man and who can recommend the best course of action.”
Businesses which applied for financial help during the pandemic, did so under the condition that any grants which were claimed in error would be paid back.
A number of businesses also face repaying deferred tax, either VAT or unpaid tax bills because of trading and cashflow difficulties.
Campbell added: “The aim was to get support to where it was most needed as quickly as possible to protect livelihoods. The bulk of the amount claimed in error relates to furlough payments.
“So far, £350m has been returned through online voluntary submission and payment procedures.
“Although HMRC does not expect to recover all grants paid out in error, over 1,200 additional members of staff have been recruited and are actively working to reclaim outstanding amounts.
“HMRC has indicated that the objective is consensual resolution using agreed repayment plans. There is clear benefit to businesses who may have claimed in error, to step forward now or face additional penalties and potentially forced insolvency.”
More information on how to pay a Covid grant back can be found here.
