10
Accepted
HMRC estimates that total fraud and error across the lifetime of the COVID-support schemes was...
Conclusion
HMRC estimates that total fraud and error across the lifetime of the COVID-support schemes was £4.5 billion, representing 4.6% of the total support provided. This is lower than the estimate HMRC included in its 2020–21 accounts. HMRC has drawn on new data to improve its estimate, from a random enquiry programme, more compliance activity and Self Assessment returns for 2020–21. The estimates are, however, still very uncertain. HMRC said that the most uncertain element was around claims for people working while their employer claimed support for them. Given the speed at which HMRC had to work to get support to individuals and businesses, it said some level of fraud and error was inevitable. HMRC accepted that it needed more timely data on taxpayers’ working patterns at the time the schemes were running, rather than activities after the event that relied on people recalling their working patterns from some time ago. It told us it would look into drawing together its lessons from the schemes to support other parts of government that are tasked with disbursing funds at pace, such as the Household Support Fund.14
Government Response Summary
The government agrees with the recommendation and states that HMRC will explore the feasibility of using advanced statistical techniques to produce and publish a robust uncertainty range for the tax gap figure, noting that transparency on uncertainty ratings has already increased.
Government Response
Accepted
Government Response
Accepted
HM Government
Accepted
2.3 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 2.4 Although HMRC has developed its capability in applying statistical techniques to calculate and publish ranges of error and fraud in the COVID-19 pandemic support schemes it may not be feasible to produce a robust uncertainty range for the headline tax gap figure. HMRC will explore the feasibility of whether these advanced statistical techniques can be applied to produce an overall uncertainty range and publish a range if it is analytically robust. 2.5 Statistics using data and modelling are subject to uncertainty and this is an inherent aspect of all tax gap estimates. The headline tax gap, the sum of 25 separate tax gap estimate methodologies, is subject to uncertainties due to the data available, how that data was collected (for example, as a result of a survey; administrative data; consumer expenditure data from the National Accounts produced by the Office for National Statistics, or a random compliance check) and the estimation method used. 2.6 The department publishes a total point estimate for the tax gap which is equal to the sum of the central estimates components and point estimates components where ranges are not produced. 2.7 The department has increased transparency on the levels of uncertainty of the estimates where this is feasible. Since ‘Measuring tax gaps 2021 edition’ an uncertainty rating for each of the tax gap components is published. These ratings range from 'very low' to 'very high’ uncertainty. For 2020-21, 71% of the tax gap estimate attained a ‘low’ or ‘medium’ uncertainty rating.
Source
Committee
Public Accounts Committee
Report
Thirty-Third Report - HMRC performance in 2021–22
11 Jan 2023
HC 686
Addressee Bodies
HM Treasury
Timeline
Recommendation age
3.5 yrs
Report published
11 Jan 2023