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The holiday's over on payroll overspend
Hard-pressed retailers could be eligible for millions of pounds worth of ex-employee payroll overspend - from salary to holiday entitlement overpayment and training provision, according to legal experts at Business Loss Prevention (BLP Ltd).
Whether it is malicious abuse or a simple administrative oversight, such overpayments, the company asserts, is unentitled and can be recovered, effectively improving a company's profit by reducing their loss.
Consequently, the Derby-based civil recovery specialists argue that it’s payback time for over-generous companies because former employees may have left with outstanding debts linked to their time in the business – from parking to speeding fines to company credit or fuel card misuse.
“It could be salary overspend or holiday payment that they were not entitled to keep, businesses are in a position to claim it back through civil recovery,” said Nermina Webster, a solicitor with BLP Ltd.
“We had one case of a salary being paid to a worker for a whole year, even though they had left the organisation. Legally, they should hand it back as they are not entitled to it and the company has every right to ask for it back,” she said.
What all parties want to avoid, she says, is going to court, but if it does, it can end up in bailiffs being engaged or, if the money owed has been spent, a County Court property order placed on a home. This means that when they want to sell the property, the amount owed is deducted from the sale profit. Or, if they don’t sell and pass title to their children, it is they who will have to pay the outstanding amount when the property is eventually put on the market.
“Or, it could be training provision, where an employee gains a qualification the business has paid for under the condition they stay with the business for a minimum period of time following achievement of the qualification, but then still duly leaves the business to use that skill elsewhere.”
She argues it is never worth holding on to funds that you are not entitled to as it will eventually catch up with you.
“It’s not fraud, but it is dishonest, and it is hard to argue that you did not see extra funds in your bank account in the case of a salary overpayment, for example.”
Businesses, she said, should undertake an in-depth review of their payroll to identify significant and unentitled overpayments and then partner with a reputable civil recovery provider to recover the loss.
Her call comes months after firms themselves came under the spotlight for receipt of unentitled funds after the government announced plans to recover up to £1bn of COVID support wrongly claimed by businesses through a specialised anti-fraud taskforce.
Official figures have estimated £5.8bn was lost to fraud through its schemes to support businesses during the pandemic, including the Coronavirus Job Retention Scheme (furlough), the Self-Employment Income Support initiative and the Eat Out to Help Out programme aimed at the hospitality sector.
In its critical report published in February, Parliament’s Public Accounts Committee (PAC) said: “HMRC’s unambitious plans” for recovering a total of £6 billion it estimates it spent incorrectly in COVID-19 support payments – whether through fraud or mistakes - could lead to “government writing off at least £4 billion” taxpayers’ money.
This, the PAC warns, “risks rewarding the unscrupulous and sending a message that HMRC is soft on fraud”.
At the time BLP Ltd received a lot of enquiries about furlough overpayments and how to recover these.
In March she said: “Many loss prevention professionals audited their payroll to make sure that payments were not made in error. They were being proactive, so that they can inform HMRC what they have found.
“Experience has shown that the longer it is left to inform HMRC of your findings, the more likely it is that that HMRC will argue that the business should have acted sooner, which then opens that business up to possible additional HMRC fines and penalties.’’
For more information on overpayment advice, visit www.business-loss-prevention.co.uk or contact Nermina directly at nermina.webster@business-loss-prevention.co.uk
