HMRC declares Taskforce’s pursuit of £4.5bn Covid fraud as not cost-effective

HM Revenue & Customs has decided to shut down its Taxpayer Protection Taskforce, which was established to reclaim £4.5 billion lost to Covid fraud, after acknowledging that the division did not provide good value for money. This taskforce was created to combat fraud in the Government’s Covid financial support programs. It is suspected that opportunistic fraudsters or unintentional errors resulted in the loss of £3.5 billion from the furlough scheme, £1 billion from the support for the self-employed program, and £71 million from the Eat Out To Help Out scheme.

In a letter released today, Jim Harra, the CEO of HMRC, informed the Treasury Select Committee that maintaining a dedicated taskforce solely focused on recovering the billions of pounds lost to fraud and error is not the most cost-effective approach for taxpayers. As per HMRC’s plans, the taskforce will be phased out by March 2023, and the responsibility of addressing wrongly claimed funds from Covid financial support schemes will be transferred to the “business-as-usual compliance teams” by September.

Throughout the lifespan of the support schemes, it is estimated that HMRC misallocated £4.5 billion. However, the fact that the taskforce is projected to recoup only £1.1 billion by September has drawn severe criticism from both the Treasury and the Public Accounts Committee of MPs, who argue that HMRC’s plan falls significantly short.

Under the 2021 Budget, the government allocated a £100 million investment over two years for the Taxpayer Protection Taskforce, which involved shifting over 1,200 experienced HMRC compliance staff onto the specialized unit. Nonetheless, HMRC believes that integrating Covid fraud work into broader compliance activities will yield a higher rate of return. The rate of return for a Taxpayer Protection Taskforce officer is £250,000, whereas an equivalent business-as-usual tax compliance officer brings in £1.3 million.

Mr. Harra emphasized that HMRC remains committed to addressing error and fraud in the Covid-19 support schemes through the most cost-effective use of resources and is not abandoning these efforts. An HMRC spokesperson also affirmed that combating Covid scheme fraudsters remains a top priority, and integrating this work into business-as-usual compliance activity represents the most efficient approach to safeguard and recover taxpayers’ money in the long run.