HMRC has told MPs on the Public Accounts Committee that it estimates that between 5% and 10% of furlough money has been wrongly awarded.
The scheme, which was launched earlier this year amid the COVID-19 pandemic, has cost the government around £35.4bn, according to the latest data.
Speaking to MPs on Monday (7 September), HMRC’s permanent secretary, Jim Harra, said:
“We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5% and 10%.
“That will range from deliberate fraud through to error.”
HMRC revealed somewhere between £1.75 billion and £3.5 billion could have been wrongly paid out. The tax authority also reported an estimated £30 billion in tax was lost in 2019 due to taxpayer errors and fraud.
Harra added:
“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.”
It is the first time HMRC has spoken publicly regarding potential public fraud that could have been committed as part of the job retention scheme, which covered up to 80% of an employees wage while they were on furlough.
According to Harra, more than 8,000 calls have been made to HMRC fraud hotline, with the tax authority looking into 27,000 “high risk” cases.
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