Why you need to act right now
A report this week from the National Audit Office indicating that up to £26 billion might not be repaid from the Bounce Back Loan scheme because of inability to pay or outright fraud has poured petrol onto the bonfire.
This would equate to a staggering 60% of recipients of the scheme which, to date, has loaned some £38 billion to 1.3 million applicants.
Gareth Davies, head of the NAO, said: “Government will need to ensure that robust debt collection and fraud investigation arrangements are in place to minimise the impact of these potential losses to the public purse.
“It should also take this opportunity to consider now the controls it would put in place to protect against the abuse of any future such schemes.”
The BBLS in particular has been hailed as a success precisely because of the positive lending criteria which has been less stringent than regular business finance applications.
The critical time pressure to get the scheme online along with genuine criticism from businesses who struggled to access funding in the first phase of coronavirus business support meant that the usual affordability and credit checks were replaced with self-certification measures and also backed with government guarantees.
So if they remain unpaid for whatever reason, then the public purse would make up the shortfall to the lenders.
The loans are not due to begin being repaid until May 2021 when the full picture will start to emerge but the fact the NAO are drawing attention to these potential discrepancies now is a significant warning on how seriously any non-payment of Covid-19 related financing will be treated.
The report comes in the same week that HMRC are giving businesses a final reminder to thoroughly check their CJRS claims for inaccuracies before the cut-off date of October 20th 2020.
The main errors they will look for in submitted claims include claiming for employees that weren’t eligible for the scheme and using wrong calculation or reference figures when determining furlough pay.
Self-declarations made after this date are “potentially subject to penalties and even prosecution in the most severe cases.”
HMRC get serious
If you’ve received a warning letter from HMRC then there are some precautions you can take right now that might be useful further down the line:
- Find and retain copies of written confirmations to employees notifying them that they would be placed on furlough
- Copies of any calculations used as the basis for any claims made
- Proof or evidence of regular working hours and/or that the furlough working ban has been strictly adhered to
If we were to use one word to describe HMRC’s approach to debt recovery then it would be relentless.
There are no grey areas – if you owe them then sooner or later, they will find out and pursue you without rest until you pay or make alternative arrangements.
But they are also fairer and more reasonable than you’d think if you are straight and honest with them from the beginning.
If you do owe them or if you believe you might have inadvertently contravened any of the CJRS’s many rules and stipulations then get in touch with us today.
We constantly help clients with HMRC arrears to work through them to a conclusion – find out how we can help you reach one too.