An estimated £5.2bn of taxpayer money from the government’s coronavirus assistance schemes ended up in the hands of fraudsters or was paid our incorrectly.
The money was dished out as part of the furlough, self-employed support and 'eat out to help out' schemes launched to help people who were struggling during the pandemic.
The figure was revealed in HM Revenue and Customs annual report published yesterday (Thursday).
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Some £60.7bn in support was handed out in the tax year to March 2021 and the report said its "current assessment of error for the government's job retention scheme, known as furlough, is 8.7 per cent while it was 2.5 per cent for support for the self-employed and 8.5 per cent for 'eat out to help out' scheme."
"We appreciate that many claimants who made inaccurate claims will have made genuine mistakes, and where we find them, we will work with customers to put them right," said the report.
The furlough scheme paid 80 per cent of the wages of 11.5 million workers placed on leave since March 2020.
HM Revenue and Customs say they stopped more than 29,000 wrong or fraudulent claims valued at £347m due to their systems.
It says a team of 1,200 staff are now working on 'post payment compliance'.
The HMRC said at one unnamed firm staff had been threatened with the sack if they didn’t continue working despite being furloughed, even if sick. An investigation resulted in the recovery of £357,000.
A restaurant with one eligible employee – the director – made a claim for the maximum of £2,500 per month to cover 'off the book' employees. The restaurant turned into a takeaway during lockdown and took orders through online platforms while also claiming to be closed. It then signed up for 'eat out to help out' while still claiming to be closed. An investigation resulted in £13,800 being recovered.
HMRC said its investigators found some takeaways which claimed to be closed with all their staff furloughed continued to receive reviews online.
An HMRC spokesperson said the schemes were created quickly to support people in dire need, and had been subsequently strengthened to crack down on fraud.
"The Covid support schemes have helped millions of people and businesses through the pandemic, and the government was clear that the priority was getting money to those who need it as fast as possible," the spokesperson said.
"The Taxpayer Protection Taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, and work is already under way, with 23,000 ongoing investigations."
Steven Porter, partner at law firm Pinsent Masons, said: "These schemes were absolutely vital to ensure the UK economy came out of the pandemic in the best possible shape. However, any handout of subsidies and aid of this size is going to attract fraudsters.
"HMRC will now be hunting down those who made fraudulent claims, particularly through the Fraud Investigation Service. There will be a wave of civil and criminal penalties, including prison sentences. The Treasury has already clawed back £98 million from fraudulent or erroneous Covid claims and a number of arrests have already been made."
