Taxman ‘too soft on furlough fraud’

TAX officials are giving the impression they are ‘soft on fraud’ because they are not doing enough to claw back money stolen from Covid support schemes, a report by MPs says today.

The public accounts committee said that HM Revenue and Customs ‘risks rewarding the unscrupulous’ if it does not crack down on criminals.

It said that the taxman had ‘unambitious plans’ for getting back money wrongly paid out under the furlough and loan schemes.

It could mean Government does not collect at least £4billion of the £6billion it estimates was lost to fraud and error. ‘HMRC’s approach to recovering fraudulent payments sends the wrong signals and risks encouraging abuse of tax and grant systems,’ the report said.

HMRC hit back, saying: ‘No fraudulent payments have been written off and we’re taking action on multiple fronts to recover overpayments.

‘The vast majority of payments in the schemes were made correctly to employers, and most error and fraud was legitimate claimants making mistakes or inflating their claims, often small amounts per case.’

An HMRC source cited the case of a pet shop worker who had fed the animals despite being on furlough. Officials have already recovered £850million and expect to find another £1billion through a task force set up to crack down on Covid fraud.

‘We told HMRC that its answer reinforced the impression that it had written off chasing fraudulent payments and errors as too difficult and too resource-intensive,’ the MPs said.

Dame Meg Hillier, chairman of the committee, said: ‘The level of fraud and error in furlough that employers will get away with is a real concern.

‘What signal does it send when HMRC rolls over on billions of pounds of fraud and error directly related to Covid support packages? With the parlous state of the public finances we can ill-afford to be so cavalier over so much taxpayers’ money. Every taxpayers’ pound lost to a fraudster will lead to honest ordinary people feeling the post-pandemic pinch harder and harder.’

The MPs also told HMRC that it had to find out whether fraudsters were claiming tax reliefs intended to help research companies. The amount of such tax relief claimed rose by 240 per cent in four years. ‘Research and development reliefs are complex and open up opportunities for abuse,’ the MPs said.