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HMRC ignorance and inaction “rewarding the unscrupulous” and looks “soft on fraud”

11 February 2022

In its report published today the Public Accounts Committee says “HMRC’s unambitious plans” for recovering a total of £6 billion it estimates it spent incorrectly in COVID-19 support payments – whether through fraud or mistakes - could lead to “government writing off at least £4 billion” taxpayers’ money. The PAC says this “risks rewarding the unscrupulous and sending a message that HMRC is soft on fraud”.

The Committee says “yet again customer service has collapsed and HMRC’s recovery plans are not clear”, and it is extremely concerned about HMRC’s capacity to clear backlogs while tackling the “avalanche of error and fraud it now faces on the COVID-19 schemes”.

The report describes a litany of longstanding PAC concerns in HMRC’s fulfilment of its most basic remit of collecting tax owed including not responding adequately to tax avoidance schemes, failing on implementing or realising benefits from the ‘Making Tax Digital’ and other long-term transformation ambitions and programmes, and being without “a convincing plan for restoring compliance activity back to pre-pandemic levels”.

The Committee also says HMRC simply doesn’t know why the cost of key tax reliefs has increased, or how much of that is due to abuse.

Chair's comments

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:

“The PAC is concerned about how long HMRC will be playing catchup to get back to revenue collection levels before the pandemic.

The level of fraud and error in furlough that employers will get away with is a real concern. What signal does it send when HMRC rolls over on billions of pounds of fraud and error directly related to Covid support packages? With the current parlous state of the public finances we can ill-afford to be so cavalier over so much taxpayers’ money.

Every taxpayers’ pound lost to a fraudster will lead to honest ordinary people feeling the post-pandemic pinch harder and harder.”

Further information

Image: HMRC