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£250m of coronavirus self-employed grants could be fake

Paloma Kubiak
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Paloma Kubiak

Early estimates suggest around £250m has been incorrectly or fraudulently claimed as part of the Self-Employment Income Support Scheme (SEISS) to help people struggling financially amid the coronavirus crisis.

Since May when the SEISS grant opened for applications, £12.9bn has been allocated to 4.7 million claimants.

But HMRC chief executive, Jim Harra, today disclosed to the Public Accounts Committee that early estimates suggest between 1-2% of SEISS claims may have been paid out in error or were obtained fraudulently.

This means around £258m may have been paid and follows HMRC’s admission in August that thousands of people in receipt of SEISS were overpaid due to a miscalculation.

Harra previously told MPs in April that HMRC expected the schemes to be a target for fraud and criminal activity due to the quick implementation and payment timescales.

An HMRC spokesperson said: “The government’s priority in administering the Self-Employment Income Support Scheme was getting money to people who needed it as quickly and safely as possible. Customers went from making a claim to having the money in their accounts within six working days, and the first tranche of the scheme saw 2.7m self-employed people claim £7.8bn after their businesses were affected by coronavirus.

“We built controls into the application process, including limiting eligibility for the scheme to those who already had a tax footprint with HMRC, to stop fraudulent claims and we’re confident that we’ve prevented large amounts of fraud. Our post-payment compliance checks to recover money paid out are set to begin with the focus on those who claimed despite having no active business.”

Still time to claim the Self-Employment Income Support Scheme

At launch and as part of the first tranche of SEISS, it allowed eligible applicants to receive a taxable grant worth 80% of average monthly profits based on the last three years of tax returns, up to a maximum of £2,500 a month, so £7,500 in total.

This first grant could be claimed up until Monday 13 July.

A second grant is available for self-employed workers until 19 October 2020. To be eligible, businesses need to prove they’ve been adversely affected by coronavirus on or after 14 July 2020.

It’s a lesser amount, worth 70% of people’s average monthly trading profits, capped at £2,190 per month so £6,570 in total.

You can make a claim for the second grant even if you didn’t make a claim for the first grant.