Recommendation 20

We asked HMRC about it plans to tackle fraud and error in the COVID-19 support schemes while ensuring the timely payments of support to those in need. HMRC explained that it has to strike a balance between helping as many people as it could, as fast as possible, while also managing the risks of fraud and error. HMRC mitigated some of the risks at the design stage of the schemes by making any support contingent on the data it already held about employers, employees and the self-employed. It was also able to identify very high-risk claims in the period of approximately 72 hours between a claim being made and payments being processed. HMRC told us it had stopped about £63 million-worth of payments during that period. However, it will have to manage the remainder of any 47 Qq 59–60 48 Q 58; C&AG’s Report, para 13 49 Qq 102–103 50 Qq 20–21; C&AG’s Report, para 2.16 51 Qq 21, 57 52 Qq 21–23 53 Q 26 HMRC performance 2019–20 15 fraud and error after payments have been made, over a period of time.54 We asked the Department about what it considered was an acceptable level of fraud in the schemes it administers. HMRC told us that no fraud is tolerable. However, in the case of the CJRS it had made a planning assumption that the level of fraud and error in the scheme could be between 5% to 10%. The lower end of the estimated level of fraud and error would be in line with the estimated levels of fraud and error in tax credits and the tax system (HMRC’s latest available estimate of the tax gap in 2018–19 was 4.7%). The upper level of HMRC’s estimate of fraud and error in CJRS, however, was significantly higher than comparable estimates and it would be “very unwelcome” to HMRC.55 HMRC explained to us that it faces a “multi-dimensional” challenge, in terms of administering COVID-19 support schemes, dealing with the end of the UK’s EU Exit transition period and modernising the tax system whilst still maintaining business as usual performance.56 To help achieve its objectives HMRC has