A recent report by the public accounts committee estimates that the level of fraud and error across all Covid-19 support schemes could be as high as £20 billion. However, don’t assume mistakes and errors will not be picked up – HMRC is running the Taxpayer Protection Taskforce (Taskforce) to scrutinise claims made.
The two main areas of concern are the furlough scheme with an expected loss through fraud of £5.3 billion, and the bounce back loan scheme with some £18 billion expected to be written off.
The Taskforce was set up a year ago and will likely be in place until March 2023. The Covid-19 support schemes to be scrutinised by the Taskforce include:
· The furlough scheme;
· Self-employment income support schemes;
· Eat out to help out; and
· Bounce back and business Interruption loans.
Some of the enquiries made by the Taskforce will be completely random, but many will be in response to information received by HMRC. The Taskforce anticipates making some 30,000 enquiries in total.
For example, from December 2020, details of furlough claims made by employers were published online. Employees could therefore report suspicions of fraudulent claims, and HMRC intends to look at every report made.
One example of compliance action highlighted by HMRC was a business that had claimed to have furloughed all of their workforce for two months. However, an analysis of card sales data showed no drop-off in trade for these two months.
Errors and mistakes
HMRC is fully aware that errors and mistakes may have been made given the pressure that business owners were under during the pandemic. Fully furloughed staff may have ended up doing some work, or the conditions for a self-employment income support scheme grant weren’t met.
Individuals and companies can use HMRC’s online disclosure service to rectify any errors or mistakes made. Voluntary disclosure is preferable to HMRC finding out for themselves.