It says that many are accidentally claiming for National Insurance Contributions (NICs) they don’t pay, and could be landed with hefty bills from the HMRC further down the line as a result.
Under the existing Employment Allowance, businesses that pay less than £100,000 in NICs each year can apply for up to £4,000 of tax relief on that bill; something that is done by many micro-businesses to reduce their National Insurance bills to zero.
HMRC is currently paying JRS claims to businesses as quickly as possible – but those who overclaim by mistake will have to pay that money back to HMRC later.
Under the JRS, employers can claim 80% of an employee’s wage up to £2,500, plus the associated Employer National Insurance contributions and pension contributions.
UHY Hacker Young says it has already corrected many furlough scheme applications from small businesses that would have had to pay significant sums back to HMRC later.
“A lot of SMEs are getting their furlough scheme applications wrong and it will cost them money once the mistakes are uncovered,” says Michael Fitch, a partner at UHY’s Belfast office
“It’s great that HMRC is taking the pragmatic approach of getting furlough scheme money out to businesses as quickly as it possibly can. However, it will catch up on its calculations later, and a lot of SMEs are going to be hit by nasty bills from accidentally overclaiming.”
“An unexpected bill of several thousand pounds from HMRC is the last thing small businesses will want to see as they fight to recover from the economic shock of Coronavirus. If they are not very careful with their furlough scheme applications, they are putting themselves at risk of just that.”
