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

2 results

5 Rejected

We are concerned that in the absence of effective criminal and civil sanctions there is...

Recommendation

We are concerned that in the absence of effective criminal and civil sanctions there is little incentive for those who overclaimed COVID-19 employment support to make repayments. Despite the billions of pounds lost in error and fraud, HMRC has taken … Read more

Government Response Summary

The government disagrees with the recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.

HM Treasury

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23 Rejected

While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on...

Recommendation

While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on the employment support schemes during 2020–21 to 2022–23, the level of penalties it has issued has been small compared to both the overpayments it has … Read more While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on the employment support schemes during 2020–21 to 2022–23, the level of penalties it has issued has been small compared to both the overpayments it has identified and the billions of pounds of error and fraud. By March 2022, HMRC had issued £3.5 million of penalties to those who overclaimed SEISS grants (the equivalent of 7% of total overpayments identified through its civil cases covering SEISS). For CJRS the figure was £1.1 million (0.5% of CJRS overpayments).41 We challenged HMRC about its approach on penalties as we were concerned that it does not provide an incentive for those who have identified they made an error in their claims to make a repayment. In particular, we asked HMRC why it had not issued penalties in four cases where the NAO found there were strong 34 C&AG’s Report paras 30.20, 3.36–3.37 35 For example, Committee of Public Accounts, Tackling tax fraud, 34th Report of Session 2015–16, HC 674, April 2016, pages 5 and 6; and Committee of Public Accounts, Collecting tax from high net worth individuals, 36th Report of Session 2016–17, HC 774, page 6 36 Public Accounts Committee, Fraud and Error, Ninth Report of Session 2021–22, HC 253, 30 June 2021 37 Qq 52, 84–86; C&AG’s Report, para 3.36 38 Q 84 39 Letter from Janet Alexander, Director, Compliance Operations, HM Revenue & Customs, to Chair of the Committee of Public Accounts, 21 November 2022 40 Qq 57, 84–86 41 C&AG’s Report, paras 3.26, 3.38 COVID employment support schemes 15 indications that claimants may have deliberately inflated claims beyond their entitlement.42 HMRC said that it was not enough to be suspicious or sceptical about a claim - it had to demonstrate that a person deliberately made a false claim or over an over-claim to impose financial penalties. If a case went to Tribunal it would need evidence that the false claim or over-claim was deliberate. HMRC accepted that fraud may have occurred in the four cas Show less

Government Response Summary

HMRC disagrees and states it will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework. 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.

HM Treasury

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Conclusions (1)

Observations and findings

21 Conclusion Rejected

We have previously expressed concern about the small number of criminal prosecutions for tax fraud.35 As part of our inquiry into fraud and error across COVID-19 support schemes, we were also concerned that inconsistencies between Departments in their approaches to the consequences of fraud and error for different groups.36 We …

Government Response Summary

The government disagrees with the Committee’s recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.

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