Employers voluntarily return more than £760m in furlough money

Latest figures reveal 3,000 firms including Primark, Asos and Halfords have ‘done the right thing’ and given back funds they did not need

More than £760m of furlough funds has now been returned to the government by 3,777 UK companies, figures from national accountancy group UHY Hacker Young have suggested.

Among those known to have returned money to HMRC so far are Primark, which recently announced it would be handing £121m back after reopening sparked “record sales”, as well as online clothing retailer Asos and Halfords, which announced in March it was returning £10m of furlough money.

Since the introduction of the furlough scheme in March 2020, £53.8bn has been claimed by employers for 11 million employees.

Neela Chauhan, partner at UHY Hacker Young, said it was likely businesses were beginning to realise they had “acted hastily when claiming furlough money” that they have since realised they did not need and have decided to “do the right thing” by returning it.

Chauhan also warned employers should expect to see HMRC’s Covid fraud taskforce increasingly taking a much tougher approach to tackling what it sees as abuse of its schemes. “[HMRC] has taken a ‘softly, softly’ approach so far by issuing nudge letters to those it suspects may have claimed furlough money incorrectly, encouraging them to hand back money voluntarily if necessary,” she said. “The next stage of its investigations will be much more aggressive.”

Although there is no specific requirement for businesses to demonstrate they have been financially impacted by Covid to claim furlough grants, there are steep penalties for those that deliberately claim furlough grants they are not entitled to. Firms that fail to notify HMRC of the grant they overclaimed can leave themselves open to penalties of up to 100 per cent of the grant. 

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Experts previously told People Management that employees and potential recruits alike were going to be looking to their businesses to make ethical decisions in the wake of the pandemic, which has shone a light on firms’ perceived social responsibilities. 

Dr Na Fu, associate professor in HRM at Trinity Business School, said responsible organisations gave their people purpose and meaningfulness of work so that people were motivated and engaged, and therefore were “setting strong examples for how responsible organisations can or should be, especially during [the] pandemic crisis”.

Gary Cookson, director of Epic HR, agreed, adding: “Seeing organisations that could return the money but choose not to could lead to severe demotivation and disengagement as employees could well question whether they are working for the right employer – this in turn could impact retention and, if word gets out, many prospective employees could be put off applying to work there.”