Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Acknowledged
The government’s policy is to pursue deliberately fraudulent behaviour, but not to penalise applicants for...
Conclusion
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 response to the COVID-19 pandemic, Session 2019–2021, HC 862, October 2020, para 3.12 28 Qq 56,64,69; C&AG’s Report, para 3.31 29 C&AG’s Report, para 3.34, Figure 10. The Eat Out to Help Out’ scheme provided a discount to encourage people to return to eating out in August 2020. 30 Qq 105–108; C&AG’s Report, para 3.24 31 Q 111 32 Committee of Public Accounts, HMRC performance in 2021–22, Thirty-third Report of Session 2022–23, HC 586 33 Q 105; C&AG’s Report, para 3.35 14 COVID employment support schemes to court, or through civil actions. HMRC has the power to raise penalties of up to 100% of any overpayment where it has sufficient evidence of deliberate fraudulent behaviour, in addition to requiring the claimant to repay the amount of money that was overpaid.34
Government Response Summary
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 fraudulent behaviour, in addition to requiring the claimant to repay the amount of money that was overpaid.
Government Response
Acknowledged
HM Government
Acknowledged
5.1 The government disagrees with the Committee’s recommendation. 5.2 In line with the recommendation, HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework. However, HMRC is unable to pre-determine case outcomes and as a result, is unable to determine whether there will be an increase in penalties in the future. 5.3 Legislation was included in Finance Act 2020 to enable HMRC to carry out compliance activities in relation to those claiming support from the COVID-19 employment support schemes. The legislation specifically provided that penalties would only be charged where grants were deliberately overclaimed. The compliance approach, supported by Parliament, was designed to recognise that claimants might make mistakes given the new and changing obligations under the schemes. 5.4 The test for charging penalties in the COVID-19 employment schemes is for HMRC to show, on the balance of probability, that the person knew either at the point of claim that they were not entitled to the Covid grant, or that they had ceased to be entitled to the grant. Penalties can only be applied where it is lawful for HMRC to issue them, and there is sufficient evidence of deliberate behaviour that could be shown in a tribunal or in court. 5.5 Since the start of compliance activity on the HMRC-administered COVID-19 employment support schemes, HMRC has charged over £12.8 million in penalties in addition to recovering over £1 billion of overclaimed support through its compliance checks. Claimants also have the chance to put things right, without fear of sanctions by repaying their claim, and HMRC has received over £1 billion in repayments outside its compliance checks.