The UK tax authority’s decision to close a taskforce focused on recovering false and incorrect claims made under the government’s flagship Covid-19 support scheme has put up to £5.1bn of taxpayers’ money at risk, according to a report to be tabled by MPs.
The cross-party House of Commons public accounts committee said on Wednesday it was “concerned” that HM Revenue & Customs’ plans to close its taxpayer protection taskforce would result in the agency paying “less attention” to billions of pounds lost. false and misleading statements.
HMRC estimates between £2bn-£5.1bn of fraud and wrongful claims in three Covid schemes run by the agency – a furlough scheme for company employees, a support program for the self-employed and the “eat out to help” food subsidy initiative. – is likely to remain unsustainable in 2023-24, according to the committee.
“It is unacceptable for HMRC to write-off such a large amount of taxpayers’ money,” added the committee in a report.
Dame Meg Hillier, chairman of the Labor committee, said “bad actors in British business run rings around the Revenue . . . recovery efforts will fail to deter potential future criminals. Too many companies claim they should not have and now will not give back”.
By 2021, the government is investing £100 million in a taxpayer protection task force, with more than 1,000 staff, to try to recover billions of pounds lost through the Covid support scheme run by HMRC.
The tax authorities admitted in January that the unit had not proved its value for money and announced plans to close it in September this year.
The taskforce is now predicted by HMRC to recover between £525 million and £625 million, according to the committee’s report.
The committee described HMRC’s “dismal” performance in recovering £2.3bn unpaid to employers who claimed leave payments for staff who continued to work.
By March 2022, the agency had recovered just £640,000 – the equivalent of just 0.03 per cent of the money it claimed was wrong.
The committee’s report said: “HMRC could do more to gather evidence on high-risk claims through visits and interviews.”
It also criticized HMRC for pursuing relatively few criminal investigations into fraudulent claims.
HMRC has opened 50,000 civil cases for fraud in the Covid scheme in October 2022, but only 31 criminal investigations in November 2022.
“Employers who have overclaimed furlough have little incentive to voluntarily pay grants because they are not likely to be penalized if identified by HMRC’s compliance team,” said the committee, urging the agency to increase the number of criminal investigations into employers.
The Treasury said it was committed to tackling errors and fraud in the Covid scheme and would not write anything down when the task force was closed.
This brings the total amount of money that HMRC has blocked from being paid, or has recovered since the start of the scheme, to more than £1.2bn.
The government said: “This scheme limits fraud and error, without delaying payments to those most in need.”