MPs accuse tax officials of being 'soft on fraud' over Covid abuse cost
TAX officials are "not doing enough" to track down money stolen from Covid support schemes, a scathing report by MPs says.
It warns that HMRC is sending out the message it is "soft on fraud" and "risks rewarding the unscrupulous". It also says the department's plans are "unambitious" for recovering money that should not have been paid out under furlough and loan schemes.
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HMRC's actions may lead the Government to write off at least £4billion of the £6billion that it estimates was lost to fraud and error in the last financial year.
The Public Accounts Committee said HMRC's approach "risks encouraging abuse of tax and grant systems in the future".
Officials at HMRC, who have already clawed back £850million, have said they expect to recover a further £1billion or more through a special Covid fraud taskforce.
But the report argues this mission statement "reinforced the impression it has written off chasing fraudulent payments and errors as too difficult and too resource-intensive".
The report did note that staff numbers at the department have been slashed by 40 per cent since 2005 and that officials now feel they can only provide a "decent" service, rather than a "brilliant" one.
The report also invites HMRC to look at whether fraudsters target tax reliefs intended to benefit research firms. It pointed out that data shows the amount that such tax reliefs have grown by 240 per cent in the last four years.
The report said: "HMRC does not know why the cost of [these] tax reliefs have grown so much. Research and development reliefs are complex and open up opportunities for abuse."
"Committee chair Dame Meg Hillier said: "The level of fraud and error in furlough that employers will getaway 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."
In January, Treasury minister Lord Agnew resigned, accusing the Government of "arrogance, indolence and ignorance" in tackling fraud.
