Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
HMRC’s performance in recovering the £2.3 billion incorrectly paid to employers claiming furlough for employees...
Recommendation
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 to work. HMRC accepted that it could not prevent such claims and it intended to recover sums through post-payment compliance activity. But two years on, HMRC’s compliance activity has had little success. HMRC estimates that it paid out £2.3 billion of furlough for employees who were in fact still working. By March 2022, HMRC’s main compliance intervention targeting employers claiming furlough for working employees had yielded only £640,000, equivalent to just 0.03% of the money claimed incorrectly. HMRC now reports it is hard for its compliance teams to prove after the event that employers were claiming furlough for employees still working, particularly if they were only furloughed part-time. HMRC could have done more to collect evidence on risky claims through visits and interviews. Given the amount of furlough claimed for working employees, HMRC needs to look again at how it collects such evidence. Recommendation 3: HMRC should set out, in its Treasury Minute response, how it will improve its ability to recover furlough claimed for employees who continued to work.
Government Response Summary
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 April 2024.
Government Response
Accepted
HM Government
Accepted
3: PAC conclusion: HMRC’s performance in recovering the £2.3 billion incorrectly paid to employers claiming furlough for employees who continued to work has been woeful. 3: PAC recommendation: HMRC should set out, in its Treasury Minute response, how it will improve its ability to recover furlough claimed for employees who continued to work. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: April 2024 3.2 HMRC will continue to address COVID-19 schemes compliance risks where it is cost effective to do so. Following two years of a taskforce approach, targeting the highest value and riskiest claims, HMRC will transition COVID-19 scheme compliance activity to be worked alongside business-as-usual tax compliance by September 2023. This is the most cost- effective way to ensure taxpayers’ money continues to be protected and recovered, as it enables HMRC to deal with all aspects of a customer’s potential non-compliance in a single check. 3.3 With the schemes closed, as action has already been taken on the riskiest claims, HMRC expects to start seeing diminishing returns, with cases of lower value and risk in the pipeline – such as the remaining profile of ‘employers claiming for employees who are working’. Therefore, HMRC has assessed that it is more cost effective for these risks to be worked on alongside business-as-usual tax compliance activity. This approach enables HMRC to deal holistically and efficiently with all aspects of a customer’s potential non-compliance issues, related to the COVID-19 schemes and more widely. 3.4 HMRC has developed a unit of expertise to ensure that knowledge gained in tackling COVID-19 scheme risks as part of the taskforce can be used to support the wider business- as-usual teams going forward.