In the last few weeks, the level of fraud and error connected to Covid schemes such as the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS) has been back in the news.

In October, the National Audit Office (NAO) reported on whether the schemes achieved their objectives, how well the schemes were implemented and managed and on HMRC’s approach to estimating errors and handling compliance.

While HM Treasury and HMRC received positive feedback for the speed at which the schemes were implemented, and it was agreed that the primary objectives of supporting jobs and livelihoods was met, HMRC has come in for some criticism around its approach to dealing with fraud and error. The NAO noted that “large amounts of error and fraud are unlikely ever to be recovered”. The figures are uncertain, but HMRC estimates the combined level of error and fraud for the two schemes at around £4.5bn. It is also believed that around two thirds of CJRS fraud relates to employers that claimed for employees who continued to work – a direct contravention of the scheme rules, but the hardest abuse for HMRC to spot.

HMRC expects to recover around £1.1bn of the amount over-claimed. At a Treasury Committee hearing last month, HMRC was questioned on that figure as it is lower than the £2bn previously estimated. HMRC explained that their expected recovery figure has dropped as there are more cases than anticipated but of small amounts, thus reducing the recovery for each case worked. HMRC also noted that a higher amount of error was found than expected and they are focusing their efforts on fraud and abuse, rather than innocent error. (It should also be pointed out that the overall estimates of fraud and error have been reduced based on the results of investigations during 2020 and 2021.)

HMRC will be winding down its dedicated covid recovery taskforce from March 2023, in order to refocus their efforts on general compliance. Employers should however make sure that they retain all their records for covid scheme claims for at least six years from the claim date in case of any future enquiries.