As many of the governments coronavirus support schemes are coming to an end, HMRC are assessing the impact of fraud within them.
HMRC’s current estimate for the amount lost to fraud and error in the schemes during 2020 to 2021 is a total of £5.8 billion against a £81.2 billion spend. 8.7% in CJRS, 2.5% in SEISS phases 1-3 and 8.5% in the eat out to help out schemes.
From the beginning, it was clear the scheme would be targets for fraud and that customers may make mistakes.
The government has invested over £100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud in the schemes. HMRC expect the Taskforce to allow them to increase one-to-one enquiries to 30,000 cases in total, across three years, up to 2022 to 2023. These are expected to recover £800 million to £1 billion between 2021 and 2023 in addition to the £536 million in 2020 to 2021. The Taskforce will continue to focus on fraud in the scheme. It will not investigate every instance of potential error or fraud, as in many cases it will not be proportionate or viable to do so.
HMRC’s 2020 to 2021 compliance results for these schemes amounted to over £743 million, achieved by preventing losses by pre-payment activity and recovering over claimed grants. Since the start of 2021 to 2022, HMRC has recovered more than £69 million bringing the total stopped or recovered since the start of the COVID schemes to over £812 million with activity ongoing.
HMRC invested in improvements to the online services, guidance and support to make it easier for customers to get it right. Customers can use the HMRC disclosure facility where they made an error or no longer need the grant. Using these services, and based on HMRC’s analysis to date, customers have now returned over £650 million in grants that were no longer required and made repayments of more than £350 million to correct mistakes without HMRC intervention in addition to the compliance results for the schemes.
Three real-world cases illustrate how the HMRC compliance approach works in practice:
- A restaurant claimed to have sold meals worth at least £550,000 on Mondays to Wednesdays in August. This seemed unlikely given the size of the restaurant and an inquiry was opened. HMRC made contact with the customer, but they provided no evidence to support their claim. The customer eventually said at least 90% of the claims were incorrect but provided no evidence to support the remaining 10%. The restaurant was required to repay the full £274,375 claimed.
- A suspect CJRS claim was identified through HMRC’s data analysis work and this was backed up by intelligence received through the Hotline. This suggested staff had been threatened with the sack if they didn’t continue working, even if sick. Following the investigation, HMRC are working to recover £357,000.
- A business claimed to have furloughed all of their workforce through April and May. However, HMRC analysts found that debit and credit card sales data showed their trade was comparable to pre-lockdown levels. The HMRC investigation yielded £53,000.
Source: gov.uk