Weak efforts to claw back stolen furlough money by HMRC to leave taxpayers with £4bn bill

Weak efforts by the taxman to clawback Covid-19 support money stolen by fraudsters will result in taxpayers shouldering a £4bn loss, warns a new report published today by a group of cross-party MPs.

“HMRC’s unambitious plans” to recover billions of misspent pounds through the furlough and business loan schemes could see taxpayers holding the bag, according to findings by the Public Accounts Committee (PAC).

The rapid speed at which pandemic support measures were rolled out has been criticised for prioritising getting money to struggling businesses and households quickly in exchange for failing to implement strong fraud prevention curbs.

HMRC estimates around £6bn of money distributed through Covid-19 support has been lost through fraud and errors. However, it only expects to recover a third of that money, according to the PAC.

The taxman has not calculated the scale of Covid-19 support fraud for the current tax year, suggesting taxpayer losses are likely to be higher. 

“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,” Labour MP and chair of the PAC Meg Hillier, said.

In a damning report of the taxman’s performance last year, the PAC slammed HMRC for failing to deliver on its “basic remit of collecting tax owed” and “responding adequately to tax avoidance”.

The PAC also said HMRC’s customer service standards slipped last year.