Source · Select Committees · Public Accounts Committee
Recommendation 13
13
HMRC estimates that error and fraud in R&D tax reliefs was £336 million in 2020–...
Conclusion
HMRC estimates that error and fraud in R&D tax reliefs was £336 million in 2020– 21, or 3.6% of related expenditure (2019–20 – £311 million or 3.6% of related expenditure). The C&AG considers the level of error and fraud estimated by HMRC to be material and qualified his regularity opinion in 2020–21 as he had first done in 2019–20. The actual level of error and fraud could be much higher as HMRC’s estimates involve judgements and assumptions.25
Government Response
Not Addressed
HM Government
Not Addressed
2.4 The government agrees with the Committee’s recommendation. 9 Target implementation date: Winter 2023 2.5 Activities are currently underway to address key error & fraud issues, including designing and implementing: • the package of R&D reform measures announced at Autumn Budget 2021 aimed at tackling abuse and improving compliance (by April 2023), including: • introducing a cross-cutting team of c50 FTE focused on abuse in partnership with HMRC’s Fraud Investigation Service • requiring all claims to be made digitally, with more detail, endorsed by a named senior officer • a programme of customer education to improve our upstream compliance programme • enhancements to HMRC’s risk profiling. 2.6 The Mandatory Random Enquiry Programme (MREP) results will be used to further inform the activities undertaken to address key error and fraud issues. This will subsequently enable HMRC to demonstrate that it is achieving a cost-effective error and fraud control environment. This control environment is defined within the NAO Error and Fraud Good Practice Guide as the environment that leads to the lowest level of error and fraud compatible with the policy intent. 2022-23 will be the first year a MREP-based estimate will be reported within HMRC’s Annual Report and Accounts.