Furlough fraud to cost up to £7bn – with no civil penalties issued yet

by Alex Dunnagan | May 12, 2021

• Furlough fraud and error set to cost between £3.5bn and £7bn

• 5 known arrests for fraud so far concerning £5m in fraud

• No civil penalties have yet been issued for furlough fraud

• More investment required to tackle the scale of the problem

Furlough fraud and error is set to cost between £3.5bn and £7bn by the time the Coronavirus Job Retention Scheme (CJRS) ends in September 2021 a new estimate produced by TaxWatch has found.

Despite being aware of the scale of the problem, and making several high profile arrests, HMRC appear not to have issued any penalties for furlough fraud yet.

DWP estimates that £4.6bn per year is lost to benefits fraud and error. To tackle this, the Counter Fraud, Compliance and Debt (CFCD) Department of the DWP had approximately 8,000 staff in 2019. By comparison, this new Taxpayer Protection Taskforce sees 1,265 HMRC staff chasing up to £7bn of money lost to fraud and error lost from CJRS, while also having to deal with issues arising from the multitude of other Covid-19 schemes.

Read the full report here.

“New £2.6bn tax compliance crackdown can’t work if existing tools are barely being used”: TaxWatch Budget analysis

The Budget’s third-largest tax pledge relies on a UK tax authority that is suffering from recruitment delays and unfinished IT systems. Just 26 of 6,700 extra compliance/debt staff promised by Chancellor are so far in post. A key tax to counter digital giants’ profit-shifting will remain despite Trump pressure, but the Budget has missed opportunities to tackle abused corporate reliefs now as large as the child benefit budget.

Staffing delays could threaten Chancellor’s £15 billion tax revenue plans

Though it’s been absent from the pre-Budget debate, the Chancellor’s second-biggest revenue-raising policy so far is a plan to boost HMRC’s personnel & systems: recruiting 6,700 more staff to chase an extra £15.5 billion of evaded tax and tax debts. Yet TaxWatch has found that just 26 of these promised new staff are yet in post, calling into question a key plank of the government’s tax and spend plans.

In the run-up to a make-or-break Budget, TaxWatch’s new State of Tax Administration report takes a deep dive into how HMRC has been running the tax system over the last year.

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