At the outset of the covid pandemic in 2020, HM Treasury and HM Revenue & Customs (HMRC) quickly made employment schemes – furlough, in full the Coronavirus Job Retention Scheme (CJRS); and the Self-Employment Income Support Scheme (SEISS). Some £97 billion of taxpayers’ money was spent. HMRC was too slow to manage problems in the support design that meant some in genuine need missed out, and to tackle fraud and error where support was given that was not actually needed, according to a report by the Public Accounts Committee of MPs.
Meg Hillier, the Labour MP who chairs the Committee, said: “Bad actors in British business are running rings around the Revenue. Perhaps some of the same companies that were complaining about even the minimal levels of transparency over billions and billions that were paid out in order to save jobs in this country but are now just lost to the public purse, likely forever. While money that genuinely saved jobs and households was got out admirably quickly, the weak recovery effort will fail to deter potential future criminals. Too many companies claimed that shouldn’t have and now won’t give it back.”
Levels of unrecovered error and fraud are far too high: HMRC has had little success recouping the £2.3 billion incorrectly paid to employers who claimed taxpayers’ money for furlough payments for employees who continued to work. The Taxpayer Protection Taskforce is being wound up without recovering the money expected, the MPs report.
In the absence of effective criminal and civil sanctions, there is little incentive for those who over-claimed COVID-19 employment support to make repayments, the MPs say. “Despite the billions of pounds lost in error and fraud, HMRC has taken little action to punish culprits. It asserts that it limits its criminal investigations to the most serious cases of fraud committed by criminals. HMRC was undertaking just 31 criminal investigations in November 2022 compared to the almost 50,000 civil cases it had opened by October 2022.”
In April 2021, HMRC set up the Taxpayer Protection Taskforce as a team of over 1,000 staff to increase its recovery of overpayments on the pandemic employment support schemes and the Eat Out to Help Out scheme of summer 2020. HMRC plans to close the Taskforce in September 2023, while it estimates that between £2 billion and £5.1 billion of error and fraud within the schemes is likely to remain unrecovered by 2023–24. For the report, visit the Parliament website.
