HMRC ‘soft on fraud’ in recovering Covid aid program losses

MPs have accused the UK’s tax authority do not do enough to recover billions of dollars lost to errors and fraud in state Covid-19 aid packages, and warned it risks being branded “soft on fraud”.

The House of Commons public accounts committee criticized HM Revenue & Customs, in a report released on Friday, saying it had a “not ambitious” plan to restore a estimated £5.8 billion incorrect payments through the three business assistance programs it administers during the pandemic.

The government has come under increasing scrutiny after billions of taxpayers were lost to fraud and mistakes related to Covid support packages, including furlough schemes and state loans to help businesses. small business.

HMRC plays a key role in providing financial support to businesses during the pandemic, paying out more than £81 billion through its coronavirus job retention scheme; self-employment income support; and eating program to help.

HMRC estimates there is an average error and fraud rate of 7.2% across the three coronavirus assistance programs.

MPs on the committee said the tax body had told the committee in December it expected to recover around £2bn of the lost money, potentially “wiping out” £4bn , the MPs on the committee said.

HMRC said that although they will try to recover all lost funds, they are focusing on examples of fraud and error.

The tax office told the commission that, in some cases, it was difficult to determine whether fraud by claimants had taken place, particularly if the employer and employee had colluded. together.

But MPs argued that HMRC’s approach to withdrawals sent the “wrong signal” and could encourage future abuse of the tax and pension system.

The commission’s report concluded: “Inaction as such risks rewarding the unscrupulous and sends a message that HMRC is soft on fraud,” the commission’s report concluded.

Meg Hillier, PAC president, said the extent of fraud and flaws in the government scam that employers are allowed to stay away from is “a real concern”.

“With the current state of poor public finances, we cannot afford to be lenient with so much taxpayer money,” she added.

The report raised some concerns about “HMRC has completed its most basic tax payment”. These include a 240% increase in the use of research and development tax breaks, over the past four years, which the commission said HMRC could not fully account for.

The commission warned that the extent of errors and fraud in R&D relief operations could be much higher than HMRC’s estimate of £336 million for 2020-21. It calls on tax authorities to do more to improve their understanding of the bailouts.

HMRC said that although it acknowledged that “lessons need to be learned”, it rejected many of the committee’s claims.

“No fraudulent payments have been written off and we are working on multiple fronts to recover overpayments,” it said, adding that the taxpayer protection task force Their bank is expected to recover up to £1 billion from fraudulent or incorrect payments.

“The vast majority of payments in programs are made correctly to employers, and most errors and frauds are legitimate claimants who err or inflate their claims. them, usually small amounts per case,” it added.

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