HMRC write off £4.3bn in Covid payments lost to fraud

HMRC are expecting to recover £1 of every £4 stolen from the public purse by fraudsters during the pandemic.

In figures published last week a total of £4.3 billion has been written off. This represents c74% of the total £5.8 billion that was stolen from its emergency Covid-19 schemes that supported swathes of the workforce during successive lockdowns, including the furlough scheme, the self-employed income support programme and Eat Out to Help Out. This means that HMRC expects a maximum of 26 per cent of money unlawfully taken from the Treasury will be recovered.

In a statement accompanying the figures, HMRC said it had been clear “from the beginning” that the furlough and self-employed schemes, which were developed within days as Britain entered lockdown and ordered businesses to shut in March 2020, would be “targets for fraud”.

In total over of £81.2 billion was spent by HMRC on the schemes and it believes £5.8 billion has been stolen by workers and businesses claiming money they were not entitled to. To date the report stated that it had recovered £500 million of overpayments in the 2020-21 tax year, and expected between £800 million and £1 billion more by 2023, a total of £1.5 billion.

Estimates suggested that the payments made to fraudsters of by mistake apportioned at 8.7 per cent of furlough payments, 8.5 per cent of payments to its Eat Out to Help Out scheme, and 2.5 per cent of cash handed to freelancers and entrepreneurs as part of its self-employed income support payments. It is unclear at the present time how many bounce back loans were fraudulently taken out.

As a firm on the front line supporting our clients during the pandemic, it was clear that the HMRC schemes prioritised paying out to people as quickly as possible at a time of extreme stress and anxiety.

Also in its statement, HMRC said it had prevented more than 100,000 “ineligible or mistaken claims” during the pandemic by putting in place controls in the digital claims process and blocked a further 29,000 claims by carrying out additional pre-payment checks based on risk profiles.

It is expected that the HMRC taskforce will begin to investigate more thoroughly the recipients of CV19 support. Our team at NR Barton are here to support clients with such investigations and you can find out more, including details of our insurance to cover the costs, here.



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