Earlier this month, the government launched a voluntary repayment scheme allowing individuals and businesses to return Covid support funds without penalty or investigation, provided repayment is made by 31 December 2025.
While this may sound low-key, the implications are significant, particularly for directors of owner-managed businesses who received financial support during the pandemic. This three-month window provides an opportunity to proactively resolve any concerns about past claims.
Why is this happening now?
During the pandemic, financial support schemes like Bounce Back Loans and furlough schemes were rolled out quickly and at scale. In total, over £10 billion was lost to pandemic fraud, flawed contracts and waste under the previous government’s mismanagement of pandemic era procurement and schemes. £1.54 billion has already been recovered through existing efforts according to HMRC.
In some cases, however, funds were accessed based on genuine need but imperfect understanding of eligibility. In others, support may have been claimed in good faith, but with changing circumstances or updated HMRC guidance, directors may now question whether the funds were appropriate and/or overpaid.
The new repayment window allows individuals and businesses to come forward voluntarily and repay support funds without triggering an automatic compliance check or penalties.
What’s in it for directors?
For directors of limited companies, this is a key opportunity to:
- Correct any support claims that may now seem questionable or unjustified
- Avoid reputational risk or future investigation by acting transparently
This is not just for intentional misuse, it covers honest mistakes, misunderstandings or situations where eligibility wasn’t clear at the time.
“We know many directors acted quickly during Covid, applying for loans and grants while juggling uncertainty. This new window offers a chance to take stock and settle any grey areas before HMRC brings in tougher penalties.” Amie Wilson, Operations Director at Harold Sharp
What schemes are covered?
The repayment window applies to:
- Coronavirus Job Retention Scheme (CJRS)
- Self Employed Income Support Scheme (SEISS)
- Eat Out to Help Out Scheme
- Cultural Recovery Fund
- Business support grants
- Grants from the Department for Health & Social Care
- COVID-19 Business Loan Guarantee Schemes e.g. Bounce Back Loan
If your company received support through any of the above, now is the time to review the eligibility criteria you declared against.
What are the risks of not repaying?
While this window is voluntary, HMRC investigations into Covid support misuse are increasing. Failure to act now could result in:
- Penalties
- Interest charges
- Public naming
- In serious cases, director disqualification or legal action
This window offers a way to mitigate these risks while staying in control of the process.
What should directors do now?
- Review all Covid-era funding your company received, including personal grants
- Cross-check eligibility against HMRC’s original scheme guidance
- Flag any concerns around claims made in haste or with incomplete information
- Speak to your accountant or adviser about how best to approach repayment
- Act before 31 December 2025 to use the protection offered by the window. Voluntary repayments can be made at GOV.UK.
How can we help?
Our team are on hand to review any concerns you may have with the claims made. Contact us or email tax@haroldsharp.co.uk to discuss your options.