In a recent policy paper, HMRC provided an update on their work tackling fraud and error in the main covid support schemes, together with their latest estimates of the amounts involved. Even though the scale of support provided during the pandemic is well known, the headline figures revealed for the two main support schemes are still striking.

According to the figures, 11.7m people were furloughed at some point between the start of the Coronavirus Job Retention Scheme (CJRS) in March 2020 and its end in September 2021, with a total of £70 billion claimed. Of that, HMRC estimates that the CJRS has a fraud rate of around 5% (with estimated lower and upper bands to that figure of 3.5% to 7.1%). This means that the amount paid out incorrectly could be in the region of £2.4 to £4.9 billion, with an average of £3.5 billion estimated as being overpaid.

A further £28.1 billion was paid out to just under three million self-employed people via the Self-Employment Income Support Scheme (SEISS). The fraud rate for SEISS is estimated to be somewhat lower, at 3.6% on average with a range of 2.7% to 4.8% - and an average total for the amount paid out as a result or fraud or error of £1 billion.

These fraud rates are lower than previous estimates as HMRC says that they now have more information and research to draw on, although the overall figures hide variations in the estimates of fraud over the life of the schemes. For example, rates of fraud and error in the later rounds of the SEISS are considered to be higher than in the earlier, simpler rounds. There is a larger uncertainty in the estimated fraud figure for CJRS since it is particularly difficult for HMRC to establish estimates of the number of claims made by an employer where their employees were still working. While on furlough, employees were specifically prohibited from working. A further update to the estimated figures will be published next year with HMRC’s 2022-23 Annual Report

Although both schemes have been closed for some months, HMRC is continuing to carry out compliance work to identify cases of error or fraud where funds need to be repaid.

In total, across the CJRS, SEISS and the Eat Out to Help Scheme, HMRC reports that by the end of the 2021-22 tax year they had recovered £762 million of overpayments, with a further £235 million collected in April 2022. HMRC has also received around £970 million in unprompted repayments either because claimants picked up and corrected errors themselves or returned the funds voluntarily as not needed. In addition, HMRC also highlights that they prevented around £425 million of claims being made at all, thanks to pre-payment checks.

The Taxpayer Protection Taskforce

HMRC’s compliance activity is still ongoing, with the report noting that HMRC can recover monies overclaimed as a result of fraud up to 20 years after the event.

As at July 2022, HMRC has 1,100 staff working on the Taxpayer Protection Force, which was set up last year to focus on recovering overpaid coronavirus support funds. By the end of March 2022, HMRC had opened over 41,000 one-to-one compliance interventions and contacted over 63,000 people via one-to-many campaigns.

Anyone who finds themselves in the position of having overclaimed funds from any of the covid support schemes should take advice on correcting their position. There is guidance on repaying CJRS and SEISS claims on GOV.UK.