More than £ 5.5bn in Covid support funds lost due to fraud or mistake | Coronavirus
More than £ 5.5 billion of taxpayer money from government coronavirus aid programs, including holidays, support for self-employed workers and ‘eat to help’ have been paid to fraudsters or distributed from incorrectly.
It emerged on Thursday that the £ 5.2bn paid by the government under the coronavirus job retention program, widely known as leave, ended up in the hands of fraudsters or was paid by mistake.
HM Revenue and Customs acknowledged in its annual report that about 8.7% of the £ 60 billion paid out under the leave scheme in fiscal year 2020-21 ended up in the hands of gangs in the organized crime, fraudsters or have been wrongly attributed.
The leave scheme has paid 80% of the wages of up to 11.5 million workers put on leave since March 2020, up to a maximum of £ 2,500 per month.
Another £ 490million was lost due to fraudulent or incorrect claims under the Self-Employed Income Support Program, while the figure was £ 70million for the ‘Eat to Help’ program Set up to encourage people to return to restaurants last summer.
A spokesperson for HMRC said the programs were created quickly to help those in need and were later scaled up to fight fraud.
“Covid’s support programs have helped millions of people and businesses get through the pandemic, and the government has made it clear that the priority is getting money to those in need as quickly as possible,” said the spokesperson.
“The Taxpayer Protection Task Force is expected to recover £ 1bn of fraudulent or incorrect payments over the next two years, and the work is already underway, with 23,000 investigations underway.”
The HMRC has said it has so far stopped or recovered £ 840million in excess grants in 2020/21.
Its annual report highlighted an anonymous company where “staff had been threatened with dismissal if they did not continue to work despite their leave, even if they were ill”. Tax investigators recovered £ 357,000 from the company.
In another case, a restaurant with “one eligible employee – the manager” claimed the maximum of £ 2,500 per month for several “unregistered employees”. At the same time, the restaurant claimed to be closed and signed up for the “Eat Out to Help” program.
Steven Porter, partner at Pinsent Masons law firm, said: “It is now clear that HMRC’s Covid support programs have presented an opportunity for many scammers. While they are clearly needed to support the economy during the pandemic and a vital lifeline for many, they have also proven too easy for criminals to exploit.
“HMRC will now track down those who have made fraudulent claims, in particular through the Fraud Investigation Service. There will be a wave of civil and criminal penalties, including prison terms. “