Red Bus: Ministers face Scots court action over 'new Post Office scandal'

The entrepreneur believes thousands of other businesses will be facing the same issues - and has offered to lay her financial records open to investigators to show that nothing is owed, so far to no avail.

The executive is now taking a judicial review case against the UK Government to the Court of Session to show that the problems are with what she describes as an administrative glitch around the portal used to make claims.

And she says that if the demand is upheld in court she will be forced to close the company with immediate effect with the loss of 22 jobs.

"We are being royally pumped," she said. "We lost hundreds of thousands of pounds during the pandemic and have still not recovered properly. We cannot now lose again it is just not possible to take another loss of such magnitude.

"This [smacks] of the Post office scandal all over again. I have had assessment officers at my door, at my home, constantly get threatening letters and telephone calls, although we have fought this and are now awaiting a judicial review. But how many people are just paying up?."

Her accountant said that without the government support, that is now being clawed back, the business would have had to close during the pandemic.

Hundreds of people were convicted after being prosecuted by the Post Office after faulty Horizon software flagged false discrepancies in accounts. An ongoing inquiry has been looking at how the court cases were being brought against sub-postmasters.

The Covid-19 financial support schemes which were implemented quickly at a time of pandemic crisis ended in 2021/22 and schemes and provided essential support to many individuals, businesses and the wider economy.

Video: A  Red Bus Bistro advert

But at at a price of £97 billion, they were costly.

The Herald can reveal that the HM Revenue & Customs' final 'likely' estimates relating to error and fraud in relation to all Covid support schemes, amounts to £5bn.

But UK Government data shows just £1.2bn has been recouped from all Covid support schemes while the HMRC wound down its specialists investigating Taxpayer Protection Taskforce last year. It is estimated that over £2bn was incorrectly paid to employers claiming furlough for employees who continued to work. And by March 2022, HMRC had claimed back only £640,000, equivalent to just 0.03% of the money claimed incorrectly.

Furlough leave is basically being laid off work temporarily and was used by the government to enable employers whose businesses were severely affected by the Coronavirus pandemic to retain their employees.

The government furlough scheme was officially called the Coronavirus Job Retention Scheme (CJRS) and ran from March 2020 to September 2021. Between March 1 and August 31, the government contributed 80% of a furloughed employee’s salary up to a monthly cap of £2,500 but it was reduced to 70% from September, 2020 and was tapered down to 60% the following month.

In November, the furlough scheme was extended with an upped 80% contribution.

The government’s policy has been to pursue deliberately fraudulent behaviour, but not to penalise applicants for honest mistakes when claiming employment support.

The taxman has the power to raise penalties of up to 100% of any overpayment where it has sufficient evidence of deliberate fraudulent behaviour, in addition to requiring the claimant to repay the amount of money that was overpaid.

By March 2022, HMRC had issued 1.1m of penalties through the furlough incentive known as the Coronavirus Job Retention Scheme and £3.5 million of penalties to those who overclaimed Self-Employment Income Support Scheme grants.

But Ms Simpson says that while hospitality businesses were being "persecuted" during the Covid crisis as restrictions of movement meant they could not operate she says they are now undergoing "the same persecution again" through the wrongful pursuit of payments.

The former air hostess who established the gastronomy-on-the-go enterprise said she had initially paid off five operational staff because they could not operate.

"Although the government were saying they would pay employers to keep the staff on through the furlough scheme I did not trust them, seems my initial gut feeling was right.

"I eventually took operational staff back on and used the furlough scheme to pay them and we went in and out of lockdowns.

"While this process was ongoing we genuinely claimed furlough money from the government, we can prove every claim was genuine, we can prove every penny was paid to our loyal staff, and yet the government are trying to claw back £40,000 that we can easily prove through bank statements from my company and bank statements from the staff involved, and wage slips.

"The government are now using a loophole in the government portal to say that the claims were not submitted properly and although we can undoubtedly prove our staff were paid this money, we have to pay the money back on an alleged administrative [glitch]."

She believes others will be dealt with in the same way and says businesses "cannot sustain this blow again".

She told the HMRC in an email that the approach to the case had been "hostile, arrogant and nonchalant".

In an email she said: "[When] the first lockdown was announced I paid off all of the operational staff as I did not trust the Government to pay to support businesses, once I knew they were going to pay to support businesses I took them back on in good faith, although I did not have to, I even took some new staff on thinking we would come out of the pandemic after the first lockdown.

"As a business operating within the hospitality industry my company was crucified, the only way it survived was with government help. Had I known that I would now be liable I would have closed the company down completely until the pandemic was completely over."

She told the HMRC that she would be mounting a legal challenge over how the government can that the course of action to claim back Covid money received "as everyone did" to protect 22 jobs and create six more.

She warned them: "I will fight this all the way".

Her accountant told her: "All staff which were part of the CJRS claim were paid in full as per the payslips. If these claims were not possible you would have had to pay the staff off as you work within the hospitality industry and accordingly this was closed by the government. You are now being penalised for being loyal to staff.

"If you have to pay this money back to HMRC, do you now contact all members of staff who were/are employed with the firm to ask for the money back or indeed pursue them for this amount. Do we now go back and amend the submissions to zero and pursue the staff?"

The company received penalties from the taxman in relation to what is owed of £1200 in January and March, 2002 alone.

They were told by the HMRC in September, last year that they had also incurred a £2,670.72 interest charge on the furlough 'overpayment' which accrues daily.

"The government are trying to intimidate people into just paying up. We are going to the judicial enquiry which we have requested last month, however the government have still taken the action of sending people to my home and sending demands for payment," said Ms Simpson.

"They are trying to claw back money that was paid to every member of staff.

"If this is demand for £40,000 is upheld, I will be closing Red Bus Bistro Company limited with immediate effect with the loss of 22 jobs. I don't have £40,000."

The Red Bus Bistro provides tours of Edinburgh and Glasgow taking visitors to famous landmarks with the offer also of freshly made food, sourced and produced locally and even a tipple of fizz, gin or malt whisky.

It says it is Scotland's only vintage red bus providing gastronomy tours of Glasgow and Edinburgh.

Ms Simpson and husband Stuart managed to find a vintage 1966 Routemaster, developed shortly after the Second World War to replace London’s trolley buses.

It became the first to hit Scotland's streets in 2016 having started its life in the 1960's serving passengers in London.

Afternoon Tea Bus Tours began in Edinburgh, and expanded into Glasgow as the gourmet fare expanded, while fully staffed by a crew wearing Blackwatch tartan uniforms.

The HMRC can pursue fraudsters through criminal investigations, which can result in cases going to court, or through civil actions.

But in November, 2022, the HMRC had 31 criminal investigations underway linked to Covid employment scheme fraud and in March the amount of claims being chased was worth just £13 million. In comparison, it had opened 49,908 civil cases by October 2022, of which it had completed 34,860.

The UK government insist that nothing has been written off and that it remains "totally committed to tackling error and fraud in the Covid-19 support schemes where doing so is a cost-effective use of taxpayer's money.

In response to the concerns, the HMRC said it was bound by strict confidentiality laws and can only respond directly if it receives a waiver from the owner of the company.

A spokesman added: “Our COVID-19 compliance approach focusses on those who deliberately abused schemes, while providing opportunities for those who overclaimed by mistake to repay without penalty.

“We never forget there’s a human story behind every case. We take a supportive approach for those who need to repay and we will work with them to find the best possible solution based on their financial circumstances.”

The spokesman said that when overclaims are identified, they will require repayment, even if they result from a mistake.