HMRC’s Covid fraud stance questioned by Public Accounts Committee

A Public Accounts Committee (PAC) report has warned that HMRC’s ‘unambitious’ plans for recovering £6 billion in Covid-19 support payments that were paid out through fraud or mistakes could lead to the Government writing off a large sum of taxpayers’ money.

In the report, Parliament’s cross-party Public Accounts Committee says that HMRC’s unambitious plans” for recovering a total of £6 billion it estimates it spent incorrectly in Covid-19 support payments – whether through fraud or mistakes – could lead to government writing off billions of pounds in taxpayers’ money.

The report comments that risks rewarding the unscrupulous and sending a message that HMRC is soft on fraud.

The Association of Accounting Technicians (AAT) flagged the issue to the PAC in November 2021, highlighting that HMRC estimated £5.8bn has been lost to fraud and error against a spend of over £80bn, while also expressing concerns about HMRC’s approach to recovering the money.

Phil Hall, Head of Public Affairs & Public Policy, AAT, said “Although HMRC is set to recover around £1.5bn of taxpayer’s money lost to fraud and error, AAT was quick to question what will happen to the remaining £4.3bn.”

“AAT accepts that the provision of enormous sums of taxpayer’s money, at pace, is going to attract fraudsters whether opportunist or organised, and likewise anything provided at great speed to many millions of people and businesses is liable to have a degree of error. However, as we made clear last year, for the official target of recovery to be only a quarter of what has been lost to fraud and error appears to be somewhat lacking in ambition.”

Dame Meg Hillier MP, Chair of the Public Accounts 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 current 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 Public Accounts Committee has recommended that where further action would be cost-effective, HMRC should commit to recovering more of the support payments lost through error and fraud and set out how this will be done as well as committing to reassessing whether its plans are sufficiently ambitious.