You are here: Home - Household Bills - News -

HMRC admits up to £3.5bn furlough claims fraudulent or paid in error

0
Written by: Emma Lunn
08/09/2020
Tax officials have told MPs that 5 to 10% of cash paid out under the Coronavirus Job Retention Scheme payments has been wrongly awarded.

The latest data shows that the furlough scheme has cost the government £35.4bn so far. This means that between £1.75bn and £3.5bn could potentially have been paid out incorrectly.

Under the furlough scheme, employers can keep employees on the payroll even if they can’t work because of coronavirus. The government paid 80% of wages, up to a monthly maximum of £2,500, from March to September. It now pays 70% of wages up to a monthly limit of £2,187.50, with the scheme due to end next month.

HMRC’s permanent secretary Jim Harra told MPs on the public accounts committee that HMRC had made an assumption that the error and fraud rate in the scheme could be between 5% and 10%.

Both HM Treasury and HMRC were called to appear in front of MPs to explain how they were intending to reduce the problem.

Harra said: “What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time.

“Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud.”

Harra advised that any worker who thinks their employer may have been fraudulently claiming furlough money can report it to the HMRC.

It was reported last month that about 3,000 companies were being investigated for furlough fraud by HMRC. The news came after several national newspapers ran stories claiming that six million workers broke the rules by doing their jobs from home during lockdown.

About 8,000 calls have been made to the HMRC’s fraud telephone hotline with the tax man investigating 27,000 “high risk” cases where they believe a serious error has been made.

Tax and advisory firm Blick Rothenberg says the missing £3.5bn may be just the tip of the iceberg.

Fiona Fernie, a disputes resolution partner at Blick Rothenberg, said: “This figure is purely an estimate and has been issued just a couple of weeks after HMRC issued the first 3,000 letters to firms asking them to check the amounts that they had claimed and warning them that they were under investigation.

“With many more businesses already under review with a view to investigation, it remains to be seen whether the estimate is accurate.  Only once the investigation programme is fully under way will it be possible to assess whether the problem is greater than currently anticipated.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week