Sleaze, corruption and HMRC - more help is neededby
The scale of fraud around Covid schemes is enormous but HMRC is barely scratching the surface.
When asked to create a radical Fantasy Budget, one of this columnist’s first thoughts was that most proposals were likely to be controversial.
Even so, it was a pleasure to discover the occasional topic on which almost every accountant could agree.
Top of the table came the billions of pounds that have escaped HMRC and the Treasury as a result of errors, collection failures and, perhaps most pertinently, fraud.
Ignoring corruption in high places, it is hard to see why no serious action has been set in train. In particular, the government should immediately reverse the decades of cuts to HMRC staffing which has destroyed the morale of those few who are left.
HMRC needs more resources to chase fraudsters
It is generally recognised that employing more HMRC investigators repays the investment by a multiple of at least three and quite possibly much more. Therefore, many might struggle to understand why such an obvious step has been ignored for year after year.
If that wasn’t clear enough already, then HMRC’s annual report is damning.
Forget about the tax gap with which we are all familiar. Shockingly, our taxing authorities estimate that 8.7% of the money paid out under the Coronavirus Job Retention (furlough) Scheme, 8.5% of the incredibly misjudged Eat out to Spread Coronavirus PR Scam last August and 2.5% of the Self-Employment Income Support Scheme (SEISS) have been lost to fraud.
In monetary terms, this means that fraudsters have been allowed to get away with well over £5 billion on the furlough scheme alone, plus some relatively small change in the other schemes – about £0.5 billion on SEIS and £70 million on cheap meals.
To be clear, this is not the amount that was wasted as a result of bad policy decisions, just the consequence of fraud.
This should be a national outrage, were the government not so embroiled in several other national outrages that are making bigger headlines, even if they are less costly.
The authorities are trying to put a brave face on things. According to a newspaper report, the Treasury has clawed back £98 million from fraudulent or erroneous Covid claims.
Its spokesperson additionally cites a number of examples of successful investigations, netting no more than a few hundred thousand pounds each. No one can deny that this is good news but it is a mere drop in a very large ocean.
A national scandal
Banging this drum can get repetitive but surely the need for a change of approach is blindingly obvious, at a time when hopefully there could be many well-qualified people looking for jobs. Putting a few hundred million pounds into a project to beef up HMRC’s investigative powers and crackdown on the fraudsters would pay absolutely massive dividends so why didn’t the Chancellor take action?
Even better, once this project was complete, there is much else that the new recruits could tackle, for example all of the wrongdoing exposed by the Paragon Papers and its predecessors, not to mention other examples of tax evasion and abusive avoidance that always seem to evade serious investigation.
These failures really should be regarded as a national scandal and those responsible forced to explain why they seem perfectly happy to let fraudsters laugh all the way to the bank.