‘Baffling’: Cafe in Northampton Railway Station will have to close if HMRC repayment remains at £17,000

Following the news that the owner of a cafe in Northampton Railway Station would have to pay back around £21,000 to HM Revenue & Customs (HMRC) for the furlough wages of three staff members, the future of The Magic Bean Emporium was hanging by a thread.

Since last Friday (August 26), the amount owner Michella Dos Santos is required to pay has been reduced to £17,084 and if the figure remains this high, she will have to shut down for good.

Michella received two letters from HMRC, telling her she has to pay back the full amount by September 22.

She said: “HMRC has become more pushy and insistent, and I don’t know what to do.

“I’m utterly shocked and confused.”

This comes after Michella claims there was confusion between herself and HMRC when the furlough scheme guidance was introduced and changed in March 2022.

HMRC paid furlough to The Magic Bean Emporium’s three new staff members, but is now asking for the money to be paid back around a year and a half later, as they believe the staff did not warrant it.

Michella said there was a crash in the system her employees were being added to, and there was also confusion around the date they had to be on it from. She said: “It was changed to March 22, and it changed from employees having to be hired by that date to being on the payroll from that date.”

Michella claims her accountant, who was dealing with getting the new employees on the system, explained the troubles they were experiencing to HMRC and it was approved – which is why the box was ticked on the HMRC form to say the employees were on the system, as they were in the process of being added.

The business owner claims HMRC made an error in calculation about the figure she is required to pay back, as HMRC agreed one member of full-time staff was eligible for some of the money they received.

In a statement submitted to Chronicle & Echo, Michella said: “I am perplexed that HMRC is expecting independent businesses to return furlough funds when staff would have been eligible for Universal Credit or Job Seekers Allowance. They essentially want me to pay for something they would have had to pay anyway, if my staff were to have applied for benefits.

“It is questionable that HMRC allowed furlough payments to continue for over a year before realising their mistake.

"By forcing me to close and pay this huge bill, HMRC is putting people out of jobs, meaning no income tax, and staff who will be reliant on state handouts. They would also be losing my business tax and business rates, which equates to around £10,000 per year.

“The short-sighted position HMRC is adopting is baffling.

“HMRC wrote off billions in fraudulent claims and it appears they are now targeting genuine claims as a way to scrape back anything they can – whether it's moral or the correct decision seems of no importance to them."

Responding to these claims, a HMRC spokesperson said: “Following discussions with the business owner we have revised the amount owed.

“We take a supportive approach to dealing with customers who need to pay back the Coronavirus Job Retention Scheme (CJRS) and we will work with them to find the best possible solution based on their financial circumstances.

“Customers may be able to enter an agreement with us to settle the amount due via affordable monthly payment options – this is called a Time to Pay Agreement and more information can be found on GOV.UK.”

The spokesperson went on to say “the HMRC’s priority was to get vital money to people quickly, to support people, businesses and the economy” and “in this case, the employer’s agent declared that all four employees were on HMRC’s Real Time Information (RTI) systems before March 19 2020, which would’ve made them eligible for CJRS”.

However, following retrospective compliance checks, HMRC found the three employees were not on RTI before the cut-off date and were therefore not entitled to the money.