HMRC’s plan to only recover a quarter of losses due to fraud and error on its COVID-support schemes does not go far enough. HMRC estimates that total error and fraud across the lifetime of the COVID-support schemes is £4.5 billion, representing 4.6% of the £96.9 billion total support provided. This is lower than HMRC’s previous estimate, though the actual level of fraud and error remains very uncertain. HMRC has drawn together a wider set of data to improve its estimate, but 6 HMRC performance in 2021–22 this is limited by the shortage of data that HMRC collected on taxpayers’ working patterns at the time the schemes were running. HMRC has been given £100 million to fund a temporary taskforce to investigate fraud and error on the schemes and has opened about 40,000 investigations so far. However, of the £4.5 billion in fraud and error losses, HMRC forecasts by the time the taskforce closes it will have recovered only around £1.1 billion, with the rate of return for the funding expected to be less than if invested in tax compliance. HMRC is yet to demonstrate it has done all it reasonably can to recover the losses and avoid the dent to public finances. HMRC risks rewarding those taxpayers that were dishonest if it does not pursue more of the losses than currently planned. Recommendation: In determining what further recovery action to take on fraud and error on the COVID-19 support schemes, HMRC should: • keep under review the return on investment of spending more resources on recovery; and • set out how it will ensure it maintains a level playing field for individuals and businesses that did not abuse the schemes, rather than being seen to reward those that were dishonest.