HMRC to recoup less than half of the £5.8bn lost from pandemic fraud and mistakes

HM Revenue & Customs (HRMC) have admitted it will struggle to recoup the the estimated £5.8bn it paid out incorrectly during the pandemic, through fraudulent claims or departmental mistakes.

HMRC paid out just over £81bn in total through the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme and Eat Out to Help Out scheme during the pandemic.

However, as first reported by the Financial Times, HMRC chief Jim Harra stated that the government expects to recoup just £2.3bn over the next 18 months.

He attributes this to time limits and an inability to keep pumping resources into following up cases.

This year, Harra set up 1000-strong Taxpayer Protection Taskforce to pursue faulty and fraudulent claims on behalf of the government.

The taskforce have already recovered £800m and are expected to secure a further £1.5bn by the end of the financial year in March 2023.

Last week, the National Audit Office (NAO) said it was “unlikely” that HMRC would be able to recover the £42bn tax debt it built up during the pandemic, which more than doubled from pre-pandemic levels.

In a press release, NAO highlighted staffing issues as a key hurdle: “HMRC intends to recruit 1,000 full time staff in 2021-22, however, it told the NAO that once staff turnover is factored in, this resource will only address current staffing shortfalls.”

“HMRC forecasts that it will have twice the usual level of debt to manage at the end of March 2022. New debtors may require more support in the short term to agree payment plans.”

It recommended that HMRC developed a revised strategy for recovering tax debt in light of the pandemic, which considers the varying impacts of the pandemic on different taxpayers, and identifies which taxpayers are more able to pay.