More than £30billion has been paid by HMRC under then government’s Job Retention Scheme but up to 10 percent of the payments may have been made fraudulently or in error according to the National Audit Office (NAO).
Fraud on the first round of the self-employed scheme is estimated to have ranged from 1 to 2 percent of the total.
Tax officials told the NAO more than half of this – around £2bn – has been paid to organised criminals posing as businesses to make claims under the scheme.
It is believed a fifth of this was also wrongly paid out by error either by employers or HMRC.
While the government has been widely praised for rolling out the scheme during the coronavirus pandemic, the NAO admitted there was not enough time to fully test the schemes.
As a result, the total scale of fraud and error was likely to be considerable.
Gareth Davies, head of the NAO, said: “It appears that the scale of fraud and error could be considerable, particularly for the furlough scheme.
“HMRC could have done more to make clear to employees whether their employer was party of the furlough scheme.”
As HMRC’s IT team usually needs 18 months to deliver projects, the exact number of fraudulent claims will not be known until the end of next year.
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A government spokesperson said: “The government’s priority from the start of the outbreak has been on protecting jobs and getting support to those who need it as quickly as possible, and our employment support schemes have provided a lifeline to millions of hardworking families across the UK.
“We make no apology for the speed at which they were delivered.
“Our schemes were designed to minimise fraud from the outset and we have rejected or blocked thousands of fraudulent claims.
“We will not tolerate those who seek to defraud taxpayers and will take action against perpetrators, including criminal prosecution.”
As cases continue to rise across the country, a number of regions have been placed back into lockdown conditions.
Bars, pubs and restaurants in Liverpool, Greater Manchester and Lancashire have all been forced to close to curb the rising number of cases.
Yesterday, Chancellor Rishi Sunak announced a new scheme to pay up to half of people’s wages as lockdown restrictions are imposed again.
Under the new scheme, employers will have to pay for a minimum of 20 percent of usual hours worked and five percent of hours not.
Announcing the measures, Mr Sunak said: “These are temporary restrictions to help control the spread of the virus.
“We have an economic plan that will protect the jobs and livelihoods of the British people wherever they live and whatever their situation.
“And I make no apology for responding to changing circumstances and so today we go further.”
