The National Audit Office (NAO), the UK’s public spending watchdog, has criticised the government for failing to safeguard the Coronavirus Job Retention Scheme (CJRS) and the Self-Employed Income Support Scheme (SEISS) against fraud.
In its report, “Implementing employment support schemes in response to the COVID-19 pandemic”, the NAO found that nine per cent of those it surveyed admitted to working in lockdown at the request of their employer, contrary to the rules of the scheme. Other employers committed furlough fraud by claiming payments and not passing them on to employees in full.
HMRC’s fraud hotline received over 10,000 reports, many referring to cases where employees worked despite their employer claiming for them as furloughed staff.
Although HMRC had decided that it would tackle fraud through whistleblowing and retrospective compliance work, this turned out to be problematic as employees did not necessarily know if their employer was part of the furlough scheme unless they had specifically been told.
As a result, HMRC has announced its intention to publish the names of employers claiming the new JSS scheme and to notify employees through their personal tax accounts when their employer has signed up to the scheme.
The NAO estimates that the scale of total fraud and error is likely to be considerable, particularly for CJRS, but HMRC will not know the actual levels until the end of 2021 at the earliest. In September, it had assumed that fraud and error could range from five to 10 per cent on CJRS – about £2 billion to £3.9 billion. For the first SEISS grant, it assumed that fraud and error could range from one to two per cent.
The NAO has recommended in the report that HM Treasury and HMRC should now consider how to ensure that reliable information, covering as many people as possible, can be used to determine eligibility so that fewer people suffering loss of income are excluded from similar schemes in the future.
It has also recommended that these departments should accelerate programmes to assess the total value of fraud and error and ensure that they commit sufficient resources to recover overpayments and fraudulent payments on both schemes “where it is cost-effective to do so.”
You can read the report in full here.
You can read a summary of the report here.
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