An HMRC unit set up to tackle Covid fraud is set to leave £3.3bn outstanding when it winds down in March 2023, campaigners have warned.
The Taxpayer Protection Taskforce, which was set up by Chancellor Rishi Sunak in March 2021, will be phased out, despite having collected less than 25 per cent of the money lost through misallocation of Covid funds.
The launch of the unit also diverted millions away from other parts of HMRC that could have been used to fund more lucrative recovery work, investigative think-tank Tax Watch said.
HMRC’s Taxpayer Protection Taskforce was set up by the Chancellor using £100m in funding with a view to recovering billions defrauded from the government via misuses of the furlough and Eat Out to Help Out schemes.
It is estimated £3.2bn- £6.4bn was mistakenly given out through the UK’s Covid support schemes – either due to error or fraud. Yet by the time the HMRC taskforce is wound up it is expected to have recovered just £525- £625m.
Tax Watch warned the launch of the taskforce also diverted more than 1,000 HMRC staff away from areas with higher returns.
The think-tank noted that HMRC’s compliance operations generated average returns on investment of 17 to one, while the taxman’s Covid taskforce reaped a return of just four to one.
The campaign group also warned of a lack of serious consequences in the vast majority of cases, as it pointed to HMRC figures showing just 29 criminal investigations had been launched over claims worth around £15m.
An HMRC spokesperson said: “We are committed to tackling fraud in the support schemes and recovering overpayments.”
The spokesperson said the £100m invested into launching the taskforce “will see us recover up to £625m from support schemes fraud and overpayments on top of funds recovered through existing compliance work”.