Nearly one in 10 workers whose wages were covered by the UK government said their bosses asked them to work while on leave, which was against the scheme’s rules.Criminal gangs have siphoned off nearly £ 2 billion of public funds allocated to help businesses and workers on leave, according to a report.
The revelations come in a review of the leave program by the National Audit Office, which praised officials for pushing through the high speed employment support programs, but said in their haste they could have left some doors open to fraudsters.
Auditors said HM Revenue and Customs should have made sure employees knew their employers were taking time off, so they could challenge potential fraud.
About 9.6 million people have been put on leave thanks to the coronavirus job retention program, while an additional 2.6 million have been helped by the self-employment income support program.
The NAO said there was evidence that “the programs provided an effective bridge during the early stages of the pandemic, allowing some people to return to work when the national lockdown eased.”
At the end of July, around 5 million people were on leave, while unemployment was broadly stable at 4%.
However, the number of people on the payroll dropped by half a million between March and April, and the NAO also found that one in five people who were not on leave still saw their pay. or his reduced hours.
The NAO said the leave program was being implemented at breakneck speed at the start of the pandemic. The HMRC IT team typically need 18 months to complete major projects, but the leave program was up and running in four weeks.
But, as a result, HMRC and the Treasury had to accept a “greater than normal risk” of fraud and error. The tax office’s initial working estimate was a fraud and error rate of between 5% and 10% for the leave scheme, or almost £ 4bn so far in cash terms.
The NAO report states that between 2.5% and 5% of the total money issued to all businesses was ‘almost certainly’ siphoned off by criminal fraudsters, ranging from £ 1 billion to £ 1.95 billion.
Auditors said that “limiting claims to existing taxpayers should have reduced the risk of fraud, but HMRC could have done more to make it clear to employees whether their employer was part of the leave scheme.”
HMRC is now faced with the challenge of knowing how to drive out possible fraudulent claims or payments made in error. The department estimates that it would take 500 staff to recover £ 275million out of 10,000 of the highest-risk leave grants.
That’s a high rate of return, but the department should remove these workers from its tax compliance team – which has an even higher rate of return.
It takes 18 months to recruit and train new staff to perform the tasks, HMRC says, so that option is off the table. This month, the ministry decided to bring in private contractors to do some of the work.
Initially, HMRC considered releasing the names of all the employers who had requested leave, but then decided not to, saying it might have deterred too many legitimate applicants.
Reaching out to staff one-on-one to tell them her employer was claiming vacation pay to cover her salary, which could have alerted employees that their workplace was making fraudulent claims, was ruled out as being too long.
HMRC will publish the names of employers who apply under the new employment support scheme and notify employees that their workplace has claimed child support to cover their wages.
A government spokesperson said: “The government’s priority since the start of the epidemic has been to protect jobs and get support for those who need it as quickly as possible, and our support programs in jobs have provided a lifeline to millions of hard-working families across the UK. . We make no apologies for the speed at which they were delivered.
“Our programs were designed to minimize fraud from the start and we have rejected or blocked thousands of fraudulent requests. We will not tolerate those who seek to defraud taxpayers and will take action against the perpetrators, including criminal prosecution.