Source · Select Committees · Public Accounts Committee
Recommendation 23
23
Accepted
Fraud and error is particularly high on the scheme for small and medium-sized enterprises, estimated...
Conclusion
Fraud and error is particularly high on the scheme for small and medium-sized enterprises, estimated at 7.3% in 2021–22. HMRC said it gets about 76,000 claims on this scheme every year, providing a lot of activity for HMRC to police.40 It said it is introducing new measures from April 2023 to strengthen its compliance activity on the schemes, including requiring more information from businesses when submitting their claim, such as the name of their advisor and a named person within the business accountable for the information in the claim.41 34 C&AG’s report, para 3.26 35 Q 96 36 Q 99; C&AG’s report, para 12 37 C&AG’s report, para 3.35 38 Qq 97–98; Office for National Statistics, Comparison of ONS business enterprise research and development statistics with HMRC research and development tax credit statistics, 29 September 2022 39 Q 98 40 Q 102 41 Q 96 16 HMRC performance in 2021–22
Government Response Summary
HMRC will continue to address and recover overclaimed grants as part of its business-as-usual compliance activity, taking action against those who have abused the COVID-19 financial support schemes where it is cost effective to do so.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented 3.9 HMRC will continue to address and recover overclaimed grants as part of its business- as-usual compliance activity, taking action against those who have abused the COVID-19 financial support schemes where it is cost effective to do so. This approach will allow HMRC to deal holistically and efficiently with all aspects of a customer’s potential non-compliance, both in relation to potentially overclaimed COVID-19 scheme grants and other risks of non- compliance with taxation obligations. 3.10 To recover overpaid grants, HMRC’s post-payment compliance strategy has addressed risks differently depending on the claimant’s behaviour and the amounts and complexity involved. For low value, non-complex matters, claimants have been prompted to check their grant and return monies if they had overclaimed, with follow-up action by HMRC where necessary. More serious cases, where HMRC has suspected a fraudulent claim had been made, have been addressed by a one-to-one investigation. Any repayment of an 11 overclaimed grant attracts statutory interest, and penalties are also charged where it is clear that the grant was deliberately overclaimed. 3.11 Deliberately overclaimed grants can escalate to criminal prosecution or be addressed through civil law investigations and penalties.