With the winding down by the government of the Covid emergency response measures, financial support for small businesses via HMRC is also coming to an end.
There are still some residual issues with the financial support. I have no doubt HMRC will continue to carry out further checks on grants paid. But this does not mean they always get it right. Over the past month, I have encountered two instances in which HMRC have made mistakes.
The First Example – HMRC and the Furlough Scheme
The first related to a furlough claim. After over a year of successful claiming, in June HMRC refused a claim for one employee of one of my clients on the grounds that she was not a UK citizen. When I called HMRC, they were adamant that there were new rules effective from the beginning of June which disallowed such claims.
Whilst still on the call, I found the published guidelines on the HMRC website and read the relevant section out loud to the HMRC operative:
“Foreign nationals are eligible to be furloughed”. This is on a web page last updated 20 May 2021.
The HMRC operative refused to accept this. When I asked to be transferred to her supervisor, she put the phone down on me; very unprofessional.
Fortunately, when I phoned back the next day after checking the rules, I spoke to a different operative who agreed the claim was valid and accepted it there and then.
The Self-Employment Income Support Scheme
The second dispute related to a Self-Employment Income Support Scheme (SEISS) claim. Around May 2020, my client realised they would not be able to pay their tax bills as their business had had to suspend trading due to COVID. They called HMRC to explain the situation; HMRC suggested that they apply for the SEISS grant. My client had considered this but, having read the guidelines, thought they were not eligible. HMRC asked them to explain their circumstances and insisted they were. My client subsequently received over £10,000 of grants.
Then, in May 2021, HMRC had written to my client basically accusing them of making a fraudulent claim. He called me, understandably upset and worried, asking for advice.
This seemed to be a clear case of misdirection by HMRC. The problem was obtaining evidence to support his claim that HMRC had given him bad information. Fortunately, my client held the trump card. He had been so unsure of the initial advice that HMRC had given him that he had phoned HMRC a second time, this time recording the call. Only after the second call had he made the claim for the grant.
The recording was unambiguous. My client had fully and clearly explained his circumstances and HMRC had clearly said he was eligible for the grant. Equipped with a recording I phoned HMRC, they accepted that the mistake was theirs and dropped any allegation of fraud or misconduct by the client.
The client did have to pay back the grant but not any interest or penalty charges.
Given the speed with which measures were introduced at the start of the Covid emergency, it is perhaps not surprising that the processes were not always well documented or understood even by the HMRC staff administering them. The experiences of my two clients do show that HMRC do not always get it right, and that it is worth challenging their decisions.
If you are in any doubt at all about your own situation, please do not hesitate to contact Aston Black on 01908 760293.