‘Shocked and appalled’: Cafe in Northampton Railway Station having to pay back around £21,000 for furlough scheme wages

The owner of a cafe in Northampton Railway Station is having to pay back around £21,000 for the furlough wages of three staff members, after HM Revenue & Customs (HMRC) said the money was wrongly granted.

Michella Dos Santos, owner of The Magic Bean Emporium, relocated to the train station around March 4 and employed three new staff members - before she knew the pandemic was on the horizon.

Michella claims confusion was created when the furlough scheme guidance was changed. Employees had to have been on a company’s books for a certain amount of time to be eligible for furlough, but Michella believes this date was changed and made later, which caused confusion.

HMRC paid The Magic Bean Emporium’s three staff members, but now the cafe is being asked to repay back this money as HMRC believes the staff did not warrant it.

Michella said: “I’m shocked and appalled that I have been made responsible for this issue.

“Looking back, it was more feasible for me to let all my staff members go as I was constantly shut due to the travel and hospitality restrictions - it was a double whammy.

“Being in this position has made me physically and mentally ill, and I’ve been suffering with anxiety and panic attacks as a result.”

The Magic Bean Emporium opened in 2014 in St Giles Street, where it was forced to close at the beginning of 2020 due to burglaries, decreased footfall, and building repairs - it was then that Michella moved to the train station.

Even now the cafe is open as normal, Michella is only trading at 60 percent of what she was during the time she was open before the first lockdown.

“Things were starting to pick up from June, but now the train strikes have heavily impacted us,” said Michella. “I’ve lost trade for two years and now suddenly HMRC has started chasing me for this payment.”

Michella said there was confusion over whether the three employees should have received the furlough money as it was not made clear by HMRC. Rather than the payments being stopped, HMRC continued to pay them and Michella says she was surprised they began to ask for the money back around a year and a half later.

Michella could go down the route of getting in touch with her former employees and taking them to the small claims court to get the money back, but she says “it is not their fault and morally it would be wrong”.

As things stand, it has “become so difficult to plan ahead” and she is only able to purchase small amounts of stock at a time.

“I can’t put the stress into words,” said Michella, “This is a horrible way to run a business and it’s not worthwhile.”

She says it may soon be time to close the doors of the cafe permanently.

In response to the claims made by Michella, a HMRC spokesperson said: “The eligibility criteria for the Coronavirus Job Retention Scheme (CJRS) stated that an employee could only be claimed for if a Real TIme Information (RTI) submission had been made on or before March 19.

“The RTI deadline of March 19 2020 was chosen because it was the day before the scheme was announced, on March 20. This allowed as many people as possible to be included and balanced the risk of fraud that existed as soon as the scheme became public.

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

HMRC says The Magic Bean Emporium’s agent confirmed all four employers were on the RTI systems before March 19 2020 - which is a system that employers use to submit Pay As You Earn information about their employees to HMRC.

However, subsequent compliance checks found three were not on RTI before this date and were therefore not entitled to claim.

When HMRC were asked if they ran the checks ahead of the payments being paid, a spokesperson said: “Our priority was to get vital money to people quickly, to support people, businesses and the economy.

“In this case, retrospective compliance checks found the three employees were not on RTI before the cut-off date.”

HMRC says “throughout their compliance response, they have taken a reasonable and supportive approach to those who have made genuine mistakes, and have given customers the opportunity to correct errors without the fear of sanctions”.

Discussions are now ongoing between the two parties.