Asked by: Beth Winter (Labour - Cynon Valley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate his Department has made of HMRC's rate of return on investment for (a) covid-schemes fraud and error and (b) tax compliance recovery.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
At Budget 2021, the Government announced an investment of over £100 million in the Taxpayer Protection Taskforce, to be in place for two years to April 2023, to combat fraud in the COVID-19 financial support schemes administered by His Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme, Self Employed Income Support Scheme and Eat Out To Help Out). Including amounts recovered through compliance work on the COVID-19 schemes before the taskforce was formed, HMRC expects to recover £1.1bn by September 2023.
On 13 October 2022, HMRC set out their plans in an issue briefing ”HMRC issue briefing: tackling error and fraud in the Covid-19 support schemes” to transition COVID-19 compliance activity to business-as-usual compliance teams by the end of September 2023.
Asked by: Sarah Olney (Liberal Democrat - Richmond Park)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to replace the Taxpayer Protection Taskforce with an alternative scheme after September 2023.
Answered by Victoria Atkins - Secretary of State for Health and Social Care
At Budget 2021, the Government announced an investment of over £100 million in the Taxpayer Protection Taskforce, to be in place for two years to April 2023, to combat fraud in the COVID-19 financial support schemes administered by HMRC (Coronavirus Job Retention Scheme, Self Employed Income Support Scheme and Eat Out To Help Out).
As planned between April and September 2023, compliance staff currently deployed on the taskforce will move back to business-as-usual tax compliance activity. Ongoing investigations into overclaimed grants that haven't been concluded will be worked to completion. HMRC will consider the risk of overclaims of COVID-19 grants alongside other tax compliance risks when prioritising cases for a compliance check. This is the most efficient way to ensure we protect and recover taxpayers’ money, as it allows HMRC to deal with all aspects of a customer’s potential non-compliance in a single check.
HMRC remains committed to tackling error and fraud in the COVID-19 support schemes where this is the most cost-effective use of resources, and we are not writing off any overpayments of grants. We will continue to take action against those who have deliberately sought to abuse the COVID-19 financial support schemes, while recognising there will be people who have made honest mistakes.
Asked by: Pat McFadden (Labour - Wolverhampton South East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many full-time equivalent staff the Taxpayer Protection Taskforce employed as of 12 July 2022.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
At Spring Budget 2021 the Government announced a £100 million investment into the Taxpayer Protection Taskforce. The taskforce was established to extend HMRC’s work to tackle fraud and error in the COVID support schemes that they administered (Self Employment Income Support Scheme, Coronavirus Job Retention Scheme, and Eat Out to Help Out). The taskforce does not deliver compliance across schemes administered outside HMRC.
Anyone who keeps grant money despite knowing they were not entitled to it, faces having to repay up to double the amount they received, plus interest and potentially criminal prosecution.
HMRC identifies claims for compliance checks where the amount of the claim is out of step with other information. The risk that the claim is incorrect may be due to either an honest mistake or fraud, therefore, the value of recovered grants does not distinguish between error and fraud.
As of July 2022, the taskforce was made up of 1,155 full-time equivalent staff (FTE). The FTE will vary across the year. The resource commitment is proportionate to the number of high-risk claims made and the risks posed by error and fraud in the HMRC administered schemes.
The taskforce commenced activity from April 2021 and will build on the £536 million already recovered in 2020-21. Taskforce performance for 2021-22 is covered in HMRC’s Annual Report and Accounts for 2021-22, which are available at: https://www.gov.uk/government/publications/hmrc-annual-report-and-accounts-2021-to-2022. This is in addition to the amounts that HMRC prevented from being paid out on incorrect claims.
Asked by: Selaine Saxby (Conservative - North Devon)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what steps she is taking to reduce levels of fraud and error in universal credit.
Answered by David Rutley - Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office)
We take any case of fraud and error extremely seriously and actively pursue fraudsters, using a wide range of powers to bring them to justice.
Last Autumn we announced a significant increase in our investment in Counter Fraud, Compliance and Debt operations by 75%, up to £1.4bn over the next three years. We are using this to scale up our existing operations, enhance our approach to data and intelligence and set up a new targeted review of the Universal Credit (UC) caseload. This will generate billions of savings over the scorecard period.
We published figures in the DWP Annual Report and Accounts 2020-21 that showed the estimated rate of fraud and error in Universal Credit was 14.5%, up from 9.4% in 2019/20.
These estimates are based on in depth reviews of a random sample of around 3,000 Universal Credit cases (taken between February and November 2020) to establish the extent of Fraud and Error. The level of fraud and error found in this sample is then applied to the 2020-21 Universal Credit expenditure to give our overall estimate. During the early months of the pandemic we faced unprecedented levels of claims, with 2.4 million new UC claims between 1 March and 26 May 2020. We took a decision to implement easements to ensure we could prioritise payments to those who needed help during this difficult time. This meant that although the overall level of fraud and error in Universal Credit across the year was 14.5%, the subset of claims made after the pandemic started had a level of 25.6%. Claims prior to the pandemic remained at a level of 9.4%. This detailed analysis indicates that the total overpayment for fraud and error for claims from the start of the pandemic (in 2020/21) was £3.1 billion, of which £1.1billion being overpaid due to incorrect information about self-employed income.
It is regrettable that people may have sought to exploit the extraordinary circumstances of a global pandemic for gain by not reporting changes in circumstances or even making false claims. This is particularly true for bogus claims orchestrated by organised criminals.
During the pandemic, we were able to detect and shut down systematic attacks on the benefit system, including preventing £1.9bn from an attack from Organised Criminals in May 2020. We removed the easements as early as possible from June 2020 and introduced new processes, including a new Enhanced Checking Service created in April 2020, comprising a team of trained investigators who review claims and contact claimants in order to obtain further information or evidence where there is suspected fraud. In total we estimate that we have prevented nearly £3bn of additional fraud and error.
Our rigorous checks to prevent fraud are now back in place and the new targeted UC case reviews funded as part of the £1.4bn investment will be focused on relentlessly pursuing and finding incorrect claims and driving out the Fraud and Error. We are determined to combat all attempts at fraud and will not hesitate to pursue those who exploit the system when benefits are there to support those most in need.
Fraud and error in the benefit system: financial year 2020 to 2021 estimates - GOV.UK (www.gov.uk)
Asked by: Ben Spencer (Conservative - Runnymede and Weybridge)
Question to the Department for Work and Pensions:
To ask the Secretary of State for Work and Pensions, what steps she is taking to reduce levels of fraud and error in universal credit.
Answered by David Rutley - Parliamentary Under-Secretary (Foreign, Commonwealth and Development Office)
We take any case of fraud and error extremely seriously and actively pursue fraudsters, using a wide range of powers to bring them to justice.
Last Autumn we announced a significant increase in our investment in Counter Fraud, Compliance and Debt operations by 75%, up to £1.4bn over the next three years. We are using this to scale up our existing operations, enhance our approach to data and intelligence and set up a new targeted review of the Universal Credit (UC) caseload. This will generate billions of savings over the scorecard period.
We published figures in the DWP Annual Report and Accounts 2020-21 that showed the estimated rate of fraud and error in Universal Credit was 14.5%, up from 9.4% in 2019/20.
These estimates are based on in depth reviews of a random sample of around 3,000 Universal Credit cases (taken between February and November 2020) to establish the extent of Fraud and Error. The level of fraud and error found in this sample is then applied to the 2020-21 Universal Credit expenditure to give our overall estimate. During the early months of the pandemic we faced unprecedented levels of claims, with 2.4 million new UC claims between 1 March and 26 May 2020. We took a decision to implement easements to ensure we could prioritise payments to those who needed help during this difficult time. This meant that although the overall level of fraud and error in Universal Credit across the year was 14.5%, the subset of claims made after the pandemic started had a level of 25.6%. Claims prior to the pandemic remained at a level of 9.4%. This detailed analysis indicates that the total overpayment for fraud and error for claims from the start of the pandemic (in 2020/21) was £3.1 billion, of which £1.1billion being overpaid due to incorrect information about self-employed income.
It is regrettable that people may have sought to exploit the extraordinary circumstances of a global pandemic for gain by not reporting changes in circumstances or even making false claims. This is particularly true for bogus claims orchestrated by organised criminals.
During the pandemic, we were able to detect and shut down systematic attacks on the benefit system, including preventing £1.9bn from an attack from Organised Criminals in May 2020. We removed the easements as early as possible from June 2020 and introduced new processes, including a new Enhanced Checking Service created in April 2020, comprising a team of trained investigators who review claims and contact claimants in order to obtain further information or evidence where there is suspected fraud. In total we estimate that we have prevented nearly £3bn of additional fraud and error.
Our rigorous checks to prevent fraud are now back in place and the new targeted UC case reviews funded as part of the £1.4bn investment will be focused on relentlessly pursuing and finding incorrect claims and driving out the Fraud and Error. We are determined to combat all attempts at fraud and will not hesitate to pursue those who exploit the system when benefits are there to support those most in need.
Fraud and error in the benefit system: financial year 2020 to 2021 estimates - GOV.UK (www.gov.uk)
Asked by: Alison Thewliss (Scottish National Party - Glasgow Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the impact of erroneous registration data on its ability to recover payments from fraudulent applications to covid-19 support schemes.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses and public services in every region and nation of the UK.
The Government takes the issue of potential fraud relating to covid support schemes extremely seriously. Robust measures were put in place to control error and fraud in the key covid support schemes from their inception.
Departments are required to disclose details of material fraud, evasion and error within their annual report and accounts, which can be found on GOV.UK. From 2021-22, departments must provide an evidenced estimate of the level of fraud and error specifically in respect of the COVID-19 related schemes they administer and the level of debt as a result of that fraud and error.
In relation to the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), HMRC prioritised getting money to those who needed it with the schemes designed to minimise fraud while not unnecessarily delaying payments. The schemes were designed to prevent fraud, both in the eligibility criteria and the claim process itself.
As recovering funds lost to organised criminals is especially difficult, HMRC prioritised tackling this risk before payments were made. Eligibility has been limited to employees and the self-employed who already had a tax footprint, which gives HMRC greater confidence these are not ‘bogus’ claims falsified to look like real businesses. HMRC also put in place a series of checks on claims before they are paid so that HMRC were able to block those that are highly indicative of criminal activity. In addition, HMRC is able to investigate suspect payments that did not meet the threshold for pre-payment blocks post-payment, using their full range of civil and criminal powers and tools.
In relation to the CJRS specifically, HMRC ensured that the claims service captured all the data necessary to enable post payment compliance and only accepted claims from employers known to and authenticated by HMRC. HMRC have actively prevented non-eligible employers from applying. Claimants are required to provide details of who has been furloughed and for how long, providing HMRC with clear data against which to make checks.
Regarding the SEISS, claimants had to have made a 2018/19 self-assessment tax return in order to claim grants 1 to 3 and a 2019/20 tax return to claim grants 4 and 5. The amount they claim is based on tax returns previously submitted to HMRC. In addition, compliance activity is underway in respect of those claimants who have indicated on their tax returns that their self-employment has ceased, but claimed a SEISS grant. If HMRC identify grants have been claimed when the person is not eligible, then recovery of the overpaid amounts is undertaken, with appropriate penalties being issued to those most egregious of cases. HMRC have also implemented pre-claim verification checks on those customers who have submitted 2019/20 returns as newly self-employed. The purpose of these checks is to establish that the return is from a genuine person, and they are undertaking self-employed activity.
Eat Out to Help Out ran for one month in August 2020. HMRC’s risk analysis identified customers whose claims indicated significantly supressed turnover and/or an inflated claim. HMRC launched a campaign aimed at encouraging these customers to repay excess claims (although where HMRC believe something is clearly egregious, they move straight to direct intervention). Customers who presented a risk following this campaign were triaged for further activity. HMRC also directly investigated around 800 of the highest risk cases.
Regarding Bounce Back Loans (BBLS), lenders were required to make and maintain appropriate anti-fraud, anti-money laundering and Know Your Customer checks. Specifically, lenders must use a reputable fraud bureau (such as The UK’s Fraud Prevention Community CIFAS’s fraud prevention and detection solution SIRA) to screen against potential or known fraudsters. If an application fails the lender’s fraud checks, the lender must not offer a loan.
In addition to these lender checks, further checks include the duplicate loan check, incorporation date check and the change in director check that were introduced in June 2020. These minimum standards were agreed following consultation with PWC and lenders on what would have the biggest impact on preventing fraud while still meeting the policy objectives.
Under the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), lenders were able to conduct full credit checks on borrowers in line with business as usual processes and thus verify the financial information provided by borrowers, with less reliance on information self-certified by the borrower (as is the case under BBLS). This reduces fraud risk by allowing lenders to assure themselves that borrowers are not providing false information in order to obtain funds.
Asked by: Alison Thewliss (Scottish National Party - Glasgow Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many and what proportion of applications to the (a) Coronavirus Job Retention Scheme, (b) Self-Employment Income Support Scheme, (c) Eat out to Help Out, (d) Coronavirus Business Interruption Loan Scheme, (e) Bounce Back Loan Scheme and (f) Coronavirus Large Business Interruption Loan Scheme that were submitted with erroneous registration data has his Department identified as involving fraud.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses and public services in every region and nation of the UK.
The Government takes the issue of potential fraud relating to covid support schemes extremely seriously. Robust measures were put in place to control error and fraud in the key covid support schemes from their inception.
Departments are required to disclose details of material fraud, evasion and error within their annual report and accounts, which can be found on GOV.UK. From 2021-22, departments must provide an evidenced estimate of the level of fraud and error specifically in respect of the COVID-19 related schemes they administer and the level of debt as a result of that fraud and error.
In relation to the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), HMRC prioritised getting money to those who needed it with the schemes designed to minimise fraud while not unnecessarily delaying payments. The schemes were designed to prevent fraud, both in the eligibility criteria and the claim process itself.
As recovering funds lost to organised criminals is especially difficult, HMRC prioritised tackling this risk before payments were made. Eligibility has been limited to employees and the self-employed who already had a tax footprint, which gives HMRC greater confidence these are not ‘bogus’ claims falsified to look like real businesses. HMRC also put in place a series of checks on claims before they are paid so that HMRC were able to block those that are highly indicative of criminal activity. In addition, HMRC is able to investigate suspect payments that did not meet the threshold for pre-payment blocks post-payment, using their full range of civil and criminal powers and tools.
In relation to the CJRS specifically, HMRC ensured that the claims service captured all the data necessary to enable post payment compliance and only accepted claims from employers known to and authenticated by HMRC. HMRC have actively prevented non-eligible employers from applying. Claimants are required to provide details of who has been furloughed and for how long, providing HMRC with clear data against which to make checks.
Regarding the SEISS, claimants had to have made a 2018/19 self-assessment tax return in order to claim grants 1 to 3 and a 2019/20 tax return to claim grants 4 and 5. The amount they claim is based on tax returns previously submitted to HMRC. In addition, compliance activity is underway in respect of those claimants who have indicated on their tax returns that their self-employment has ceased, but claimed a SEISS grant. If HMRC identify grants have been claimed when the person is not eligible, then recovery of the overpaid amounts is undertaken, with appropriate penalties being issued to those most egregious of cases. HMRC have also implemented pre-claim verification checks on those customers who have submitted 2019/20 returns as newly self-employed. The purpose of these checks is to establish that the return is from a genuine person, and they are undertaking self-employed activity.
Eat Out to Help Out ran for one month in August 2020. HMRC’s risk analysis identified customers whose claims indicated significantly supressed turnover and/or an inflated claim. HMRC launched a campaign aimed at encouraging these customers to repay excess claims (although where HMRC believe something is clearly egregious, they move straight to direct intervention). Customers who presented a risk following this campaign were triaged for further activity. HMRC also directly investigated around 800 of the highest risk cases.
Regarding Bounce Back Loans (BBLS), lenders were required to make and maintain appropriate anti-fraud, anti-money laundering and Know Your Customer checks. Specifically, lenders must use a reputable fraud bureau (such as The UK’s Fraud Prevention Community CIFAS’s fraud prevention and detection solution SIRA) to screen against potential or known fraudsters. If an application fails the lender’s fraud checks, the lender must not offer a loan.
In addition to these lender checks, further checks include the duplicate loan check, incorporation date check and the change in director check that were introduced in June 2020. These minimum standards were agreed following consultation with PWC and lenders on what would have the biggest impact on preventing fraud while still meeting the policy objectives.
Under the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), lenders were able to conduct full credit checks on borrowers in line with business as usual processes and thus verify the financial information provided by borrowers, with less reliance on information self-certified by the borrower (as is the case under BBLS). This reduces fraud risk by allowing lenders to assure themselves that borrowers are not providing false information in order to obtain funds.
Asked by: Alison Thewliss (Scottish National Party - Glasgow Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate his Department has made of the number of applications to the (a) Coronavirus Job Retention Scheme, (b) Self-Employment Income Support Scheme, (c) Eat out to Help Out, (d) Coronavirus Business Interruption Loan Scheme, (e) Bounce Back Loan Scheme and (f) Coronavirus Large Business Interruption Loan Scheme that were submitted with erroneous registration data; and how many and what proportion of those applications involve fraud.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses and public services in every region and nation of the UK.
The Government takes the issue of potential fraud relating to covid support schemes extremely seriously. Robust measures were put in place to control error and fraud in the key covid support schemes from their inception.
Departments are required to disclose details of material fraud, evasion and error within their annual report and accounts, which can be found on GOV.UK. From 2021-22, departments must provide an evidenced estimate of the level of fraud and error specifically in respect of the COVID-19 related schemes they administer and the level of debt as a result of that fraud and error.
In relation to the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), HMRC prioritised getting money to those who needed it with the schemes designed to minimise fraud while not unnecessarily delaying payments. The schemes were designed to prevent fraud, both in the eligibility criteria and the claim process itself.
As recovering funds lost to organised criminals is especially difficult, HMRC prioritised tackling this risk before payments were made. Eligibility has been limited to employees and the self-employed who already had a tax footprint, which gives HMRC greater confidence these are not ‘bogus’ claims falsified to look like real businesses. HMRC also put in place a series of checks on claims before they are paid so that HMRC were able to block those that are highly indicative of criminal activity. In addition, HMRC is able to investigate suspect payments that did not meet the threshold for pre-payment blocks post-payment, using their full range of civil and criminal powers and tools.
In relation to the CJRS specifically, HMRC ensured that the claims service captured all the data necessary to enable post payment compliance and only accepted claims from employers known to and authenticated by HMRC. HMRC have actively prevented non-eligible employers from applying. Claimants are required to provide details of who has been furloughed and for how long, providing HMRC with clear data against which to make checks.
Regarding the SEISS, claimants had to have made a 2018/19 self-assessment tax return in order to claim grants 1 to 3 and a 2019/20 tax return to claim grants 4 and 5. The amount they claim is based on tax returns previously submitted to HMRC. In addition, compliance activity is underway in respect of those claimants who have indicated on their tax returns that their self-employment has ceased, but claimed a SEISS grant. If HMRC identify grants have been claimed when the person is not eligible, then recovery of the overpaid amounts is undertaken, with appropriate penalties being issued to those most egregious of cases. HMRC have also implemented pre-claim verification checks on those customers who have submitted 2019/20 returns as newly self-employed. The purpose of these checks is to establish that the return is from a genuine person, and they are undertaking self-employed activity.
Eat Out to Help Out ran for one month in August 2020. HMRC’s risk analysis identified customers whose claims indicated significantly supressed turnover and/or an inflated claim. HMRC launched a campaign aimed at encouraging these customers to repay excess claims (although where HMRC believe something is clearly egregious, they move straight to direct intervention). Customers who presented a risk following this campaign were triaged for further activity. HMRC also directly investigated around 800 of the highest risk cases.
Regarding Bounce Back Loans (BBLS), lenders were required to make and maintain appropriate anti-fraud, anti-money laundering and Know Your Customer checks. Specifically, lenders must use a reputable fraud bureau (such as The UK’s Fraud Prevention Community CIFAS’s fraud prevention and detection solution SIRA) to screen against potential or known fraudsters. If an application fails the lender’s fraud checks, the lender must not offer a loan.
In addition to these lender checks, further checks include the duplicate loan check, incorporation date check and the change in director check that were introduced in June 2020. These minimum standards were agreed following consultation with PWC and lenders on what would have the biggest impact on preventing fraud while still meeting the policy objectives.
Under the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), lenders were able to conduct full credit checks on borrowers in line with business as usual processes and thus verify the financial information provided by borrowers, with less reliance on information self-certified by the borrower (as is the case under BBLS). This reduces fraud risk by allowing lenders to assure themselves that borrowers are not providing false information in order to obtain funds.
Asked by: Alison Thewliss (Scottish National Party - Glasgow Central)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many and what proportion of (a) Coronavirus Job Retention Scheme, (b) Self Employment Income Support Scheme, (c) Eat out to Help Out, (d) Coronavirus Business Interruption Loan Scheme, (e) Bounce Back Loan Scheme and (f) Coronavirus Large Business Interruption Loan Scheme payments that involved fraud cannot be recovered by his Department due to erroneous registration data.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses and public services in every region and nation of the UK.
The Government takes the issue of potential fraud relating to covid support schemes extremely seriously. Robust measures were put in place to control error and fraud in the key covid support schemes from their inception.
In relation to the Coronavirus Job Retention Scheme (CJRS) and Self-Employment Income Support Scheme (SEISS), HMRC prioritised getting money to those who needed it with the schemes designed to minimise fraud while not unnecessarily delaying payments. The schemes were designed to prevent fraud, both in the eligibility criteria and the claim process itself.
As recovering funds lost to organised criminals is especially difficult, HMRC prioritised tackling this risk before payments were made. Eligibility has been limited to employees and the self-employed who already had a tax footprint, which gives HMRC greater confidence these are not ‘bogus’ claims falsified to look like real businesses. HMRC also put in place a series of checks on claims before they are paid so that HMRC were able to block those that are highly indicative of criminal activity. In addition, HMRC is able to investigate suspect payments that did not meet the threshold for pre-payment blocks post-payment, using their full range of civil and criminal powers and tools.
In relation to the CJRS specifically, HMRC ensured that the claims service captured all the data necessary to enable post payment compliance and only accepted claims from employers known to and authenticated by HMRC. HMRC have actively prevented non-eligible employers from applying. Claimants are required to provide details of who has been furloughed and for how long, providing HMRC with clear data against which to make checks.
Regarding the SEISS, claimants had to have made a 2018/19 self-assessment tax return in order to claim grants 1 to 3 and a 2019/20 tax return to claim grants 4 and 5. The amount they claim is based on tax returns previously submitted to HMRC. In addition, compliance activity is underway in respect of those claimants who have indicated on their tax returns that their self-employment has ceased but claimed a SEISS grant. If HMRC identify grants have been claimed when the person is not eligible, then recovery of the overpaid amounts is undertaken, with appropriate penalties being issued to those most egregious of cases. HMRC have also implemented pre-claim verification checks on those customers who have submitted 2019/20 returns as newly self-employed. The purpose of these checks is to establish that the return is from a genuine person, and they are undertaking self-employed activity.
Eat Out to Help Out scheme ran for one month in August 2020. HMRC’s risk analysis identified customers whose claims indicated significantly supressed turnover and/or an inflated claim. HMRC launched a campaign aimed at encouraging these customers to repay excess claims (although where HMRC believe something is clearly egregious, they moved straight to direct intervention). Customers who presented a risk following this campaign were triaged for further activity. HMRC also directly investigated around 800 of the highest risk cases.
Regarding Bounce Back Loans (BBLS), lenders were required to make and maintain appropriate anti-fraud, anti-money laundering and Know Your Customer checks. Specifically, lenders must use a reputable fraud bureau (such as The UK’s Fraud Prevention Community CIFAS’s fraud prevention and detection solution SIRA) to screen against potential or known fraudsters. If an application fails the lender’s fraud checks, the lender must not offer a loan.
In addition to these lender checks, further checks include the duplicate loan check, incorporation date check and the change in director check that were introduced in June 2020. These minimum standards were agreed following consultation with PWC and lenders on what would have the biggest impact on preventing fraud while still meeting the policy objectives.
Under the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS), lenders were able to conduct full credit checks on borrowers in line with business as usual processes and thus verify the financial information provided by borrowers, with less reliance on information self-certified by the borrower (as is the case under BBLS). This reduces fraud risk by allowing lenders to assure themselves that borrowers are not providing false information in order to obtain funds.
Asked by: Kate Hollern (Labour - Blackburn)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent estimate he has made of the funds paid out to dormant companies in relation to the coronavirus support schemes.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The COVID-19 support schemes have helped millions of people and businesses through the pandemic. These schemes are part of the collective national effort to protect jobs. HMRC administered the Coronavirus Job Retention Scheme (CJRS), Self Employed Income Support Scheme (SEISS) and the Eat Out to Help Out Scheme (EOHO)
SEISS was only payable to non-incorporated businesses. CJRS and EOHO was payable to both non-incorporated and incorporated businesses.
HMRC prioritised getting money to those who needed it with the schemes designed to minimise fraud while not unnecessarily delaying payments. The schemes were designed to prevent fraud, both in the eligibility criteria and the claim process itself. However, they could still be attractive to fraudsters.
To qualify for the Coronavirus Job Retention Scheme employers needed to have a Pay As You Earn (PAYE) scheme and submitted a Real Time Information (RTI) return with details of the employees’ wages. For instance, for claim periods between 1 November 2020 and 30 April 2021 employees included in furlough claims must have been employed on 30 October 2020 and HMRC must have received an RTI submission between 20 March 2020 and 30 October 2020 notifying a payment through PAYE in respect of that employee.
To qualify for the Eat Out to Help Out Scheme, claimants needed to register confirming they met the following criteria:
The company will have to have been actively trading to make a valid claim.
To ensure quick payment, HMRC undertook pre-payment risk assessments within 72 hours of receipt, blocking those indicating criminal activity.
As businesses were required to be active to make a valid claim, HMRC believes that the risk of funds being paid to dormant companies to be low.