Recommendations & Conclusions
26 items
2
Recommendation
Fortieth Report - COVID employment supp…
Accepted
Gaps and lags in HMRC’s data contributed to the schemes providing excessive support to some, while others in need were ineligible. We have previously reported that data limitations contributed to some people being excluded from the schemes, including the newly self-employed and employed, and limited company directors who took their …
Government response. The government agrees with the committee's recommendation and has consulted on options for improving the range of data HMRC collects, uses and shares, including collecting data on employee hours worked, dividends received, and start and end dates of self-employment, with …
HM Treasury
3
Recommendation
Fortieth Report - COVID employment supp…
Accepted
HMRC’s performance in recovering the £2.3 billion incorrectly paid to employers claiming furlough for employees who continued to work has been woeful. When it introduced CJRS in spring 2020, HMRC recognised that there was a high risk that employers would exploit the scheme by claiming furlough for employees that continued …
Government response. HMRC will transition COVID-19 scheme compliance activity to be worked alongside business-as-usual tax compliance by September 2023 as the most cost-effective approach and has developed a unit of expertise to support wider teams with knowledge gained. Target implementation date is …
HM Treasury
4
Recommendation
Fortieth Report - COVID employment supp…
Accepted
HMRC’s decision to close the Taxpayer Protection Taskforce in 2023–24 puts at risk the recovery of taxpayers’ money paid out as a result of error and fraud. In April 2021, HMRC set up the Taxpayer Protection Taskforce as a dedicated team of over 1,000 staff to increase its recovery of …
Government response. HMRC will continue compliance work on the COVID-19 employment support schemes while it remains cost-effective, assessing cost-effectiveness by reviewing COVID-19 scheme risks alongside business-as-usual tax risks from September 2023. HMRC will publish COVID-19 compliance outcomes in the HMRC Annual Report …
HM Treasury
5
Recommendation
Fortieth Report - COVID employment supp…
Rejected
We are concerned that in the absence of effective criminal and civil sanctions there is little incentive for those who overclaimed COVID-19 employment support to make repayments. Despite the billions of pounds lost in error and fraud, HMRC has taken little action to punish culprits. It asserts that it limits …
Government response. The government disagrees with the recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.
HM Treasury
6
Recommendation
Fortieth Report - COVID employment supp…
Not Addressed
The Departments have yet to fully capture the lessons that must be learnt from the employment support schemes to inform future large-scale government financial interventions. We have stressed throughout our work examining the COVID-19 pandemic the vital importance of government learning lessons from its preparedness and response. It is imperative …
Government response. The government response is completely unrelated to the recommendation, and instead discusses DVLA driving license backlogs.
HM Treasury
1
Conclusion
Fortieth Report - COVID employment supp…
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury and HM Revenue & Customs (HMRC) (collectively the Departments) on the COVID-19 employment support schemes.1
Government response. The government acknowledged that the committee took evidence from HM Treasury and HM Revenue & Customs (HMRC) on the COVID-19 employment support schemes and that this document is their response.
HM Treasury
7
Conclusion
Fortieth Report - COVID employment supp…
Not Addressed
We also asked the Departments whether the evaluations would cover the schemes’ effects on groups who were not eligible and groups that were supported, including those on furlough who took a second job.10 The Departments committed to looking at whether the evaluations could cover the groups of people not eligible …
Government response. The government response is completely unrelated to the conclusion, and instead discusses cancer waiting times and NHS funding.
HM Treasury
8
Conclusion
Fortieth Report - COVID employment supp…
Acknowledged
We pressed the Departments on the schemes’ wider impacts including whether the schemes had contributed to the increasing number of business insolvencies and the increasing level of economic inactivity, given that the number of inactive people over 50 increased by almost 500,000 between October to December 2019 and October to …
Government response. The Departments stated that final evaluations would examine the schemes’ impacts on inactivity but that there was no evidence of increasing inactivity being particularly related to the schemes. They added that there had been a legal embargo on creditor insolvencies …
HM Treasury
9
Recommendation
Fortieth Report - COVID employment supp…
Accepted
The Departments told us that in the longer-term they were interested in comparing outcomes from the schemes in the UK with other countries, as many other developed countries ran similar schemes but designed them in slightly different ways. For example, the Departments explained that they would like to look at …
Government response. HM Treasury and HM Revenue and Customs will continue their engagements with other relevant countries, to understand their experiences and the impacts of implementing similar employment support schemes, and comparative evidence will be included in the CJRS and SEISS final …
HM Treasury
10
Conclusion
Fortieth Report - COVID employment supp…
Accepted
In December 2020 we reported that an estimated 1.1 million people were excluded from the initial phases of CJRS because HMRC did not have sufficient data to verify claims. These people comprised 0.7 million limited company directors who took their income as dividends and 0.4 million short-term or freelancer workers …
Government response. The government agrees with the committee's recommendation and has consulted on options for improving the range of data HMRC collects, uses and shares, including collecting data on employee hours worked, dividends received, and start and end dates of self-employment, with …
HM Treasury
11
Conclusion
Fortieth Report - COVID employment supp…
Accepted
Weaknesses in the Departments’ data also contributed to the schemes providing support to taxpayers whose incomes were not significantly affected by the COVID-19 pandemic. Eighteen percent of the value of the first three SEISS grants—around £3.5 billon—was paid to people who saw their turnover increase in 2020–21 even without the …
Government response. The government agrees with the committee's recommendation and has consulted on options for improving the range of data HMRC collects, uses and shares, including collecting data on employee hours worked, dividends received, and start and end dates of self-employment, with …
HM Treasury
12
Recommendation
Fortieth Report - COVID employment supp…
Accepted
We asked the Departments whether they now knew what data they were missing and what they needed to collect to allow them to be better prepared in future. HMRC told us that since the schemes had closed it had run a public consultation on whether to collect additional data from …
Government response. The government consulted on options for improving the range of data HMRC collects and following consideration of the views of respondents to the consultation, the government will prioritise three options to be taken forward in a future Finance Bill with …
HM Treasury
13
Recommendation
Fortieth Report - COVID employment supp…
Accepted
In December 2020 we reported that the age of HMRC’s Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. HMRC has an existing programme, Making Tax Digital, which will lead to self-employed people providing quarterly information on their expenses and income rather than …
Government response. The government agrees with the recommendation and will prioritise collection of data on employee hours worked, dividends received from owner-managed businesses, and start/end dates of self-employment, with intentions to collect this data from April 2024. It also mentioned making Tax …
HM Treasury
14
Conclusion
Fortieth Report - COVID employment supp…
In July 2022, HM Revenue & Customs (HMRC) estimated that £4.5 billion had been paid to claimants as a result of error and fraud within the two schemes. It told us that this remained its best estimate of the extent of error and fraud within the two schemes.21 In July …
HM Treasury
15
Conclusion
Fortieth Report - COVID employment supp…
As part of our initial inquiry into fraud and error across COVID-19 support schemes in June 2021, we concluded that departments did not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayers, and that gaps in information sharing was hindering …
HM Treasury
16
Conclusion
Fortieth Report - COVID employment supp…
We also received written evidence from the Chartered Institute of Taxation. It told us the SEISS application process was likely to have contributed to ineligible claims. It said that, because taxpayers rather than agents had to apply for SEISS, HMRC made the application process simple and straight forward, but in …
HM Treasury
17
Recommendation
Fortieth Report - COVID employment supp…
Accepted
The main cause of error and fraud on CJRS was furlough paid to employers for employees who were still working. HMRC recognised at the start of CJRS in spring 2020 that there was a high risk that employers would exploit the scheme by claiming furlough for employees that continued to …
Government response. HMRC will transition COVID-19 scheme compliance activity to be worked alongside business-as-usual tax compliance by September 2023 and has developed a unit of expertise to ensure that knowledge gained in tackling COVID-19 scheme risks can be used to support the …
HM Treasury
18
Recommendation
Fortieth Report - COVID employment supp…
Accepted
HMRC established the Taxpayer Protection Taskforce in April 2021 to increase its compliance activities on the two employment support schemes and Eat Out to Help Out.29 HMRC told us it had received £100 million to fund the cost of moving over 1,000 compliance staff from its tax compliance teams to …
Government response. HMRC will continue compliance work on the COVID-19 employment support schemes as part of business-as-usual tax compliance activity, reviewing all COVID-19 scheme risks alongside business-as-usual tax risks from September 2023, and will continue to collect performance metrics. The target implementation …
HM Treasury
19
Recommendation
Fortieth Report - COVID employment supp…
Accepted
HMRC plans to wind up the Taxpayer Protection Taskforce between April and September 2023, returning its staff to business-as-usual tax compliance activities. It said it would continue to look at non-compliance on the COVID-19 schemes as part of a customer’s general tax compliance. There is a risk that the closure …
Government response. HMRC will continue compliance work on the COVID-19 employment support schemes as part of business-as-usual tax compliance activity, reviewing all COVID-19 scheme risks alongside business-as-usual tax risks from September 2023, and will continue to collect performance metrics. The target implementation …
HM Treasury
20
Conclusion
Fortieth Report - COVID employment supp…
Acknowledged
The government’s policy is to pursue deliberately fraudulent behaviour, but not to penalise applicants for honest mistakes when claiming employment support. HMRC can pursue fraudsters through criminal investigations, which can result in cases going 27 C&AG’s Report, paras 3.5, 3.8, 3.31, Figure 10; C&AG’s Report, Implementing employment support schemes in …
Government response. The government's policy is to pursue deliberately fraudulent behaviour, but not to penalise applicants for honest mistakes when claiming employment support and HMRC can raise penalties of up to 100% of any overpayment where it has sufficient evidence of deliberate …
HM Treasury
21
Conclusion
Fortieth Report - COVID employment supp…
Rejected
We have previously expressed concern about the small number of criminal prosecutions for tax fraud.35 As part of our inquiry into fraud and error across COVID-19 support schemes, we were also concerned that inconsistencies between Departments in their approaches to the consequences of fraud and error for different groups.36 We …
Government response. The government disagrees with the Committee’s recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.
HM Treasury
22
Conclusion
Fortieth Report - COVID employment supp…
Acknowledged
We asked HMRC why the number of prosecutions was so low and why it was not being tougher on those who had made fraudulent claims for employment support. HMRC told us that its approach was broadly the same as it applied to the tax system, where it used civil means …
Government response. HMRC explained that its approach to fraud in the schemes was similar to the tax system, using civil means primarily and reserving criminal investigations for very serious cases. They updated the committee on the number of criminal and civil investigations …
HM Treasury
23
Recommendation
Fortieth Report - COVID employment supp…
Rejected
While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on the employment support schemes during 2020–21 to 2022–23, the level of penalties it has issued has been small compared to both the overpayments it has identified and the billions of pounds of error and fraud. …
Government response. HMRC disagrees and states it will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework. Penalties can only be applied where it is lawful for HMRC to issue them, and there …
HM Treasury
24
Conclusion
Fortieth Report - COVID employment supp…
Acknowledged
We have stressed throughout our work examining the COVID-19 pandemic the importance of government learning lessons from its preparedness and response. In July 2021, we reported that the Government’s response to the pandemic had been least effective in areas that we have repeatedly reported on, including data quality and data …
Government response. The government has stressed the importance of learning lessons from its preparedness and response to the COVID-19 pandemic. They cited work to build on the UK’s existing international collaborations including strong bilateral and multilateral relationships, to drive greater and broader …
HM Treasury
25
Recommendation
Fortieth Report - COVID employment supp…
Accepted
We asked HM Treasury and HMRC what lessons they had learned that could be used in the event of the next emergency, and what they would do differently in future. They identified successes they would like to preserve, in particular, they said there had been effective close working between policy …
Government response. HM Treasury and HMRC will include lessons learned from the CJRS and the SEISS in the final evaluation reports to be published in 2023. They have also developed CJRS and SEISS playbooks that are kept updated and will be amended …
HM Treasury
26
Recommendation
Fortieth Report - COVID employment supp…
Accepted
We asked HM Treasury and HMRC whether they would establish a “how to” guide for responding to future crises. They told us that for the employment support schemes they had brought together material in a “playbooks” that people can use in the future. We also asked about whether lessons learned …
Government response. HM Treasury and HM Revenue and Customs will include lessons learned, where appropriate, from the CJRS and the SEISS in the final evaluation reports to be published in 2023. They have developed CJRS and SEISS playbooks, allowing for the rapid …
HM Treasury