Suspect claims blocked by HMRC

The tax authority blocked less than £30m of suspect claims in the first year of the coronavirus job retention scheme compared with an estimated £5.3bn paid out due to fraud and error.

“These schemes have been a lifeline to millions of people, and HMRC developed and launched them at incredible speed,” it said in a statement, adding: “We were clear from the outset that the [scheme] would be targeted and that a small minority would seek to exploit the scheme.

David Clarke, chair of the Fraud Advisory Panel charity and former police head of the National Fraud Intelligence Bureau, said that the relatively small sums of money blocked did “not reassure me that we’ve got the systems and sufficient people to make sure money reaches the right people, particularly if we have to have another major distribution of emergency stimulus money”.

The tax authority revealed in its annual accounts published last month that of the total suspect payouts in the first year, 6.1 per cent was estimated to be due to “opportunistic fraud”, defined as “deliberate manipulation of legitimate claims”.

The data shows that in the financial year to the end of March 2021, HMRC blocked 3,578 claims for furlough money, totalling £28.5m. Over the same period, HMRC paid out £61bn through the scheme.

Jim Harra, HMRC’s chief executive, said that the agency expected to recoup about £2.15bn of the £5.8bn of fraud and error in the three pandemic schemes it administered this month. The job retention scheme, one of three state coronavirus support programmes run by HMRC, paid out £70bn in wages to millions of workers until it closed in September.

HMRC said much of the fraud arose from activity that was difficult to detect upfront, such as employers claiming furlough money for employees who continued to work, either voluntarily or at their boss’s orders.

The Financial Times revealed that one businessman claimed £27m using thousands of fake or stolen employee records this year. But it also involved significant waste, with the tax authority estimating 8.7 per cent of all payouts in the first year were due to fraud and error. The Financial Times obtained the figure through a freedom of information request that underlines the trade-offs involved in setting up the furlough scheme within weeks of the government ordering the first lockdown last March. that a small minority would seek to exploit the scheme.’

The scheme, which was launched in April 2020, was widely credited with preventing mass unemployment. However, court records show he could move £430,000 out of the country before HMRC recovered the rest.

Summarised www.sba.tax

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