HM Revenue and Customs (HMRC) has revealed that more than £5.5bn of taxpayer money from the government’s coronavirus support schemes was lost to fraud or paid in error last year. The revelations came in the department’s annual report, which detailed losses across the furlough, self-employment, and ‘eat out to help out’ initiatives.
The largest sum, £5.2bn, was lost from the Coronavirus Job Retention Scheme, commonly known as furlough, which paid 80% of wages for up to 11.5 million workers. HMRC estimates that 8.7% of the £60bn distributed under furlough in 2020-21 ended up in the hands of fraudsters or was awarded erroneously.
An additional £490m was lost from the Self-Employment Income Support Scheme (SEISS), while £70m went missing from the ‘eat out to help out’ programme, which offered discounts at restaurants last summer. HMRC noted that the schemes were created swiftly to support those in urgent need but have since been toughened to combat fraud.
A spokesperson for HMRC said the priority was to get money to people quickly, but added that the Taxpayer Protection Taskforce is expected to recover £1bn over the next two years. The taskforce has already stopped or recovered £840m of over-claimed grants in 2020/21, and 23,000 investigations are underway.
The report highlighted examples of abuse, including a company that threatened to sack staff if they worked while furloughed, and a restaurant that claimed maximum furlough for bogus employees while simultaneously signing up for ‘eat out to help out’. HMRC recovered £357,000 from the first firm. Legal experts warned of a wave of civil and criminal penalties, including prison sentences, as the tax authority pursues fraudulent claims.
