Small Businesses at Risk of HMRC Bills from Furlough Scheme Mistakes

  • SMEs making errors on furlough grant applications
  • Government covering Employer’s National Insurance Contributions for furloughed employees
  • Micro-businesses may have reduced National Insurance bills to zero with Employment Allowance
  • HMRC correcting overclaimed amounts later
  • Unexpected costs for small businesses struggling during coronavirus pandemic

Small and medium-sized enterprises (SMEs) are facing potential financial difficulties due to errors in their applications for the government’s furlough scheme, according to accountancy firm UHY Hacker Young. The firm has observed that many SMEs have included the cost of Employer’s National Insurance Contributions (NICs) for furloughed employees in their applications, even though the government already covers this cost under the existing Employment Allowance. This allowance enables businesses with annual NICs below £100,000 to claim up to £4,000 in tax relief, reducing National Insurance bills to zero for many micro-businesses. HMRC is currently processing furlough scheme claims rapidly but will later correct overclaimed amounts, leading to unexpected costs for SMEs. Michael Fitch, partner at UHY Hacker Young, warns that these businesses must be cautious with their applications to avoid additional financial strain during the coronavirus crisis.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about SMEs making errors on their furlough scheme applications and the potential consequences of overclaiming. It cites a source (UHY Hacker Young) and includes expert commentary from Michael Fitch, a partner at the firm. The article is focused on the main topic without digressions or irrelevant details.
Noise Level: 3
Noise Justification: The article provides relevant information about a potential issue faced by small businesses during the pandemic and offers advice on how to avoid mistakes in their furlough scheme applications. It also highlights the consequences of overclaiming and the importance of accuracy in such applications. However, it does not contain any new insights or solutions beyond what has already been reported elsewhere.
Financial Relevance: Yes
Financial Markets Impacted: Small businesses and HMRC
Financial Rating Justification: The article discusses financial errors made by small businesses in their furlough scheme applications, which will result in them having to repay money to HMRC. This impacts the financial situation of these businesses and HMRC’s revenue.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the article, and there are no significant consequences or impacts discussed.

Reported publicly: www.retailsector.co.uk