More than 350 businesses fight Gov's £2.4m repayment demands

Tuesday 21 February 2023

More than 353 appeals totalling £2.4m were made by businesses who believed they were wrongly told to pay back co-funded payroll money given to them during the pandemic.

The scheme was launched in April 2020 to help firms pay their staff during covid. It ran for 21 months until last January and paid out more than £141m.

At its peak, the scheme supported more than 15,000 jobs across 4,100 businesses, which had to fit an eligibility criterion and prove that they had experienced a drop in turnover.

The criteria was updated several times over its seven phases.

However, following an audit, the Government found that £10.8m had been overpaid, which it would attempt to recover.

Reasons for over-payment include self-employed islanders using their total sales to claim for co-funded payroll money instead of their annual income.

The £10.8m amounted to less than 8% of total payments. The Government say this was a much lower rate of repayment than that for many other wage subsidy schemes established in other jurisdictions.  

So far, 729 repayments totalling £4.9m (45% of the total) have been paid in full. 

However, hundreds of businesses have disputed the amount of money that the Government said they had to be paid back.

Pictured: The Co-Funded Payroll Scheme was announced by then Economic Development Minister Lyndon Farnham in March 2022.

As part of her ‘100-day Plan’ after getting into office, Chief Minister Kristina Moore pledged to establish a formal appeals process – something she had recommended as a backbencher when chair of the Corporate Services Scrutiny Panel.

This process opened on 7 October and closed on 31 December last year.

New figures now reveal how many businesses appealed their repayment demand.

Of the 353 appeals submitted before the deadline, 161 (45%) have now been settled. Of those, 38 (24%) resulted in a reduction or elimination of the repayment requirement.  

63% (101 appeals) resulted in the business being given more time to repay. The maximum time to repay has been increased to ten years and the minimum period is two years.  

157 businesses (44% of the total appeals) have been asked to provide further information and 35 are with civil servants reporting to the Appeals Ministerial Group for review having provided more information.

It is understood that, in the next few weeks, the Government will set a deadline for information to come in, and a closure date for the process.

To ensure that all claimants are given a similar amount of time, the deadlines will be phased based on the date information was requested.  

Although the appeals window has now closed, if people have money to repay and did not appeal, the Government will still carry out affordability reviews to assess if repayment schedules are suitable.

Once the whole process has been completed and all final outcomes have been issued, a review of the Co-Funded Payroll Scheme will be carried out.

It is understood that Treasury Minister Ian Gorst will comment on whether the scheme has been a success at that scheme at that point.

Last year, a group of small businesses who had received repayment demands said that the appeals process was not fit for purpose. 

One of them, Sophie Walton, said that most repayments notices that the group had received were down to an error with the claims’ website, which first called for gross profit before asking for net profit. 

Pictured: "We are still struggling with the longer effects of covid and we will continue to fight for what is fair," said Sophie Walton.

But the group was told that businesses would not be able to base their appeal on this error.

This week, Ms Walton said that the majority of the group had held off paying any of the demands, and a lawyer was now dealing with the Government on their behalf.

"Our main complaint is that many of the demanded repayments were due to human error in regards to net or gross. Those who have been affected by this have not even been given the chance to have their figures settled on net profit as they are automatically cut off the appeals system.

"This is what we were originally asking the Chief Minister to sort out via the appeals system, as it was unjust to deny sole traders the chance to appeal."

She added: "We are still struggling with the longer effects of covid and we will continue to fight for what is fair."