Rishi Sunak risks reversing £4bn of taxpayers’ money taken by COVID fraudsters
The UK Treasury plans to write off around £4billion in COVID loans that ended up in the hands of fraudsters, with MPs saying the ‘ignorance’ displayed by HMRC makes it ‘soft’.
The Public Accounts Committee has slammed HMRC’s ‘unambitious plans’ for recovering a total of £6billion which it says was incorrectly paid in COVID support loans. According to the committee’s report, Chancellor Rishi Sunak risks “cancelling at least £4billion” of taxpayers’ money.
Losses are expected to top the reported £2billion as HMRC has yet to release its 2021-22 error and fraud estimates. Current figures only take into account 2020-21.
Meg Hillier, chair of the Public Accounts Committee, said: “The level of fraud and error in furloughs that employers will get away with is a real concern. What signal does it send when HMRC waives billions of pounds of fraud and error directly linked to COVID support packages? With the current state of public finances, we cannot afford to be so cavalier with so much taxpayers’ money.
The Bounce Back Loan program was set up in April 2020 with the aim of keeping small businesses afloat during the coronavirus pandemic. A total of 1.5m loans worth £47bn have been issued under the initiative.
To streamline the process, paperwork for the program was minimal, with self-certified applications and no credit checks.
Now HMRC says 8.7% of furlough payments were made either to fraudsters or in error.
In 8.5% of payments to the Eat Out to Help Out scheme, which was set up to help restaurants reopened in the summer of 2020, and 2.5% of the money given to freelancers and entrepreneurs under of its self-employed income support payments, the money was stolen by workers or businesses claiming money to which they were not entitled.
The leader of an organized crime gang, with 48 convictions to his name, managed to get £50,000 from the scheme.
A Tory minister in the House of Lords has already resigned to attack the government’s handling of fraudulent COVID business loans.
Lord Agnew accused the Treasury of having “little interest in the consequences of fraud on our society”.
“Every taxpayer pound lost to a tax evader will make honest, everyday people feel the post-pandemic pinch harder and harder,” Hillier said.
The committee said that HMRC’s failure to fulfill its core mission of collecting tax due “risks rewarding the unscrupulous and sending the message that HMRC is soft on fraud”.
MPs recommend that HMRC take a number of steps to reassure Parliament and the public that it is serious about tackling errors and fraud in COVID support schemes and ‘takes all recovery action there where it pays to do so”.
Watch: What is the Bounce Back Loan program?