Source · Select Committees · Public Accounts Committee

Fortieth Report - COVID employment support schemes

Public Accounts Committee HC 810 Published 8 March 2023

Report Status

Government responded

Conclusions & Recommendations

26 items (14 recs)

Source

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Government Response

AI assessment · 23 of 26 classified

Accepted 13

Acknowledged 5

Not Addressed 2

Rejected 3

Recommendations

11 results

2 Accepted

Gaps and lags in HMRC’s data contributed to the schemes providing excessive support to some,...

Recommendation

Gaps and lags in HMRC’s data contributed to the schemes providing excessive support to some, while others in need were ineligible. We have previously reported that data limitations contributed to some people being excluded from the schemes, including the newly … Read more

Government Response Summary

The government agrees with the committee's recommendation and has consulted on options for improving the range of data HMRC collects, uses and shares, including collecting data on employee hours worked, dividends received, and start and end dates of self-employment, with implementation planned from April 2024.

HM Treasury

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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 … Read more

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.

HM Treasury

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4 Accepted

HMRC’s decision to close the Taxpayer Protection Taskforce in 2023–24 puts at risk the recovery...

Recommendation

HMRC’s decision to close the Taxpayer Protection Taskforce in 2023–24 puts at risk the recovery of taxpayers’ money paid out as a result of error and fraud. In April 2021, HMRC set up the Taxpayer Protection Taskforce as a dedicated … Read more

Government Response Summary

HMRC will continue compliance work on the COVID-19 employment support schemes while it remains cost-effective, assessing cost-effectiveness by reviewing COVID-19 scheme risks alongside business-as-usual tax risks from September 2023. HMRC will publish COVID-19 compliance outcomes in the HMRC Annual Report and Accounts for 2022-23 and will maintain internal management information.

HM Treasury

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9 Accepted

The Departments told us that in the longer-term they were interested in comparing outcomes from...

Recommendation

The Departments told us that in the longer-term they were interested in comparing outcomes from the schemes in the UK with other countries, as many other developed countries ran similar schemes but designed them in slightly different ways. For example, … Read more

Government Response Summary

HM Treasury and HM Revenue and Customs will continue their engagements with other relevant countries, to understand their experiences and the impacts of implementing similar employment support schemes, and comparative evidence will be included in the CJRS and SEISS final evaluations by December 2023.

HM Treasury

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12 Accepted

We asked the Departments whether they now knew what data they were missing and what...

Recommendation

We asked the Departments whether they now knew what data they were missing and what they needed to collect to allow them to be better prepared in future. HMRC told us that since the schemes had closed it had run … Read more

Government Response Summary

The government consulted on options for improving the range of data HMRC collects and following consideration of the views of respondents to the consultation, the government will prioritise three options to be taken forward in a future Finance Bill with the intention to collect this data from April 2024.

HM Treasury

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13 Accepted

In December 2020 we reported that the age of HMRC’s Self Assessment system made it...

Recommendation

In December 2020 we reported that the age of HMRC’s Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. HMRC has an existing programme, Making Tax Digital, which will lead to self-employed people … Read more In December 2020 we reported that the age of HMRC’s Self Assessment system made it more difficult for HMRC to provide financial support for the self-employed. HMRC has an existing programme, Making Tax Digital, which will lead to self-employed people providing quarterly information on their expenses and income rather than a single annual tax return. HMRC recognised that it was taking longer than it would like to implement Making Tax Digital, but stressed that this was a key reform that would give it access to more real-time data on self-employment and would make it easier to include the self-employed in future schemes.19 In September 2021, HMRC announced that the introduction of Making Tax Digital for self-employed people would go back a year to 2024–45. We pressed HMRC on whether Making Tax Digital would be in place by 2024–25. It did not commit to 2024–25, saying it would be quite pressured for both it and software houses and small businesses to be ready in time and it would keep the delivery date under review.20 16 Committee of Public Accounts, Covid-19: Support for jobs, para 13 and page 6; C&AG’s Report, Implementing employment support schemes in response to the COVID-19 pandemic, Session 2019–2021, HC 862, October 2020, Figure 6; and HM Treasury, Treasury Minutes: Government responses to the Committee of Public Accounts on the Thirtieth to the Thirty-Fourth reports from Session 2019–21, CP 389, February 2021 17 C&AG’s Report, paras 11, 2.13 18 Qq 2, 72–73; HMRC, Improving the data HMRC collects from its customers, 20 July 2022, https://www.gov.uk/ government/consultations/improving-the-data-hmrc-collects-from-its-customers/improving-the-data-hmrc- collects-from-its-customers (accessed 2 December 2022) 19 Qq 35, 72; Committee of Public Accounts, Covid-19: Support for jobs, page 5 20 Qq 78–80; HMRC, Businesses get more time to prepare for digital tax changes, September 2021, https://www. gov.uk/government/news/businesses-get-more-time-to-prepare-for-digital-tax- Show less

Government Response Summary

The government agrees with the recommendation and will prioritise collection of data on employee hours worked, dividends received from owner-managed businesses, and start/end dates of self-employment, with intentions to collect this data from April 2024. It also mentioned making Tax Digital for Income Tax, which will provide a more up-to-date data picture of the income and expenditure levels of self-employed customers.

HM Treasury

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17 Accepted

The main cause of error and fraud on CJRS was furlough paid to employers for...

Recommendation

The main cause of error and fraud on CJRS was furlough paid to employers for employees who were still working. HMRC recognised at the start of CJRS in spring 2020 that there was a high risk that employers would exploit … Read more The main cause of error and fraud on CJRS was furlough paid to employers for employees who were still working. HMRC recognised at the start of CJRS in spring 2020 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. HMRC’s estimates indicated that £2.3 billion was paid to employers for periods when employees were working. HMRC began deploying significant numbers of staff to its post- payment compliance activities to recover overpayments from October 2020. By March 2022, HMRC’s compliance work targeting employers who claimed furlough for working 21 Q 50; HMRC, Annual Report and Accounts 2021 to 2022, HC 494, 18 July 2022 22 HMRC, Error and fraud in the COVID-19 schemes: methodology and approach (an update for 2022), 18 July 2022, Table A1 and Table A2, https://www.gov.uk/government/publications/measuring-error-and-fraud-in-the-covid- 19-schemes/error-and-fraud-in-the-covid-19-schemes-methodology-and-approach-an-update-for-2022 (accessed 2 December 2022) 23 Public Accounts Committee, Fraud and Error, Ninth Report of Session 2021–22, HC 253, 30 June 2021 24 Qq 58–59, 81 25 CES0002, Cifas, paras 4, 6–8, published 17 November 2022 26 CES0001, Chartered Institute of Taxation, paras 5.20 to 5.22, published 17 November 2022 COVID employment support schemes 13 employees had closed 254 cases and had yielded only £640,000.27 We asked HMRC why it had found so few cases. It told us that it could identify working while furlough at the ‘extremes’, for example, where it could find evidence of economic activity by an employer that claimed to have furloughed 100% of their staff for 100% of the time. However, for most stages of CJRS, when furloughed employees could legitimately work part time, HMRC said it was difficult for its staff to determine whether people were working at times when t Show less

Government Response Summary

HMRC will transition COVID-19 scheme compliance activity to be worked alongside business-as-usual tax compliance by September 2023 and has developed a unit of expertise to ensure that knowledge gained in tackling COVID-19 scheme risks can be used to support the wider business- as-usual teams going forward.

HM Treasury

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18 Accepted

HMRC established the Taxpayer Protection Taskforce in April 2021 to increase its compliance activities on...

Recommendation

HMRC established the Taxpayer Protection Taskforce in April 2021 to increase its compliance activities on the two employment support schemes and Eat Out to Help Out.29 HMRC told us it had received £100 million to fund the cost of moving … Read more

Government Response Summary

HMRC will continue compliance work on the COVID-19 employment support schemes as part of business-as-usual tax compliance activity, reviewing all COVID-19 scheme risks alongside business-as-usual tax risks from September 2023, and will continue to collect performance metrics. The target implementation date is April 2024.

HM Treasury

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19 Accepted

HMRC plans to wind up the Taxpayer Protection Taskforce between April and September 2023, returning...

Recommendation

HMRC plans to wind up the Taxpayer Protection Taskforce between April and September 2023, returning its staff to business-as-usual tax compliance activities. It said it would continue to look at non-compliance on the COVID-19 schemes as part of a customer’s … Read more

Government Response Summary

HM Treasury

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25 Accepted

We asked HM Treasury and HMRC what lessons they had learned that could be used...

Recommendation

We asked HM Treasury and HMRC what lessons they had learned that could be used in the event of the next emergency, and what they would do differently in future. They identified successes they would like to preserve, in particular, … Read more

Government Response Summary

HM Treasury and HMRC will include lessons learned from the CJRS and the SEISS in the final evaluation reports to be published in 2023. They have also developed CJRS and SEISS playbooks that are kept updated and will be amended as necessary upon publication of the evaluations.

HM Treasury

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26 Accepted

We asked HM Treasury and HMRC whether they would establish a “how to” guide for...

Recommendation

We asked HM Treasury and HMRC whether they would establish a “how to” guide for responding to future crises. They told us that for the employment support schemes they had brought together material in a “playbooks” that people can use … Read more We asked HM Treasury and HMRC whether they would establish a “how to” guide for responding to future crises. They told us that for the employment support schemes they had brought together material in a “playbooks” that people can use in the future. We also asked about whether lessons learned would be set out clearly in their final evaluation. They said this was not the purpose of the public evaluation. Instead, they referred to their 42 Qq 87, 94; C&AG’s Report, paras 3.39 43 Qq 87–88, 97–98, 103 44 Q 70 45 Committee of Public Accounts, Initial lessons from the government’s response to the COVID-19 pandemic, 13th Report of Session 2020–21, HC 175, July 2021, pages 3, 6 46 Committee of Public Accounts, Government preparedness for the COVID-19 pandemic: Lessons for government on risk, 46th Report of Session 2021–22, HC 952, March 2022, pages 3, 7 47 HM Treasury, Treasury Minutes: Government Response to the Committee of Public Accounts on the Forty-Third to the Forty-Eighth report from Session 2021–22, CP 678, May 2022 48 Qq 112–113 16 COVID employment support schemes “playbooks”, which they said they would keep up to date.49 On error and fraud, in October 2022 HMRC updated its published summary of its approach to managing the risks of error and fraud, but this did not capture what lessons it had learnt and what should be done differently in any future crisis intervention.50 However, HMRC had previously told us it would look at drawing together its lessons from the schemes to support other parts of government that are tasked with disbursing funds at pace, such as the Household Support Fund.51 49 Qq 25, 114 50 HMRC, Tackling error and fraud in the Covid-19 support schemes, updated 13 October 2022, https://www.gov. uk/government/publications/hmrc-issue-briefing-tackling-error-and-fraud-in-the-covid-19-support-schemes/ tackling-error-and-fraud-in-the-covid-19-support-schemes (accessed 2 December 2022) 51 Committee of Public Accounts, HMRC performance in 2021–22, Thirty-th Show less

Government Response Summary

HM Treasury and HM Revenue and Customs will include lessons learned, where appropriate, from the CJRS and the SEISS in the final evaluation reports to be published in 2023. They have developed CJRS and SEISS playbooks, allowing for the rapid deployment of new employment and income support schemes in the future, if required. Target implementation date is by December 2023.

HM Treasury

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Conclusions (2)

Observations and findings

10 Conclusion Accepted

In December 2020 we reported that an estimated 1.1 million people were excluded from the initial phases of CJRS because HMRC did not have sufficient data to verify claims. These people comprised 0.7 million limited company directors who took their income as dividends and 0.4 million short-term or freelancer workers …

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11 Conclusion Accepted

Weaknesses in the Departments’ data also contributed to the schemes providing support to taxpayers whose incomes were not significantly affected by the COVID-19 pandemic. Eighteen percent of the value of the first three SEISS grants—around £3.5 billon—was paid to people who saw their turnover increase in 2020–21 even without the …

Government Response Summary

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