HMRC Chief Executive appears at Public Accounts Committee
Jim Harra, HMRC’s Chief Executive and First Permanent Secretary, appeared at the Public Accounts Committee (PAC) today. You can watch his appearance.
Jim was asked to comment on a range of topics including the tax gap, EU transition the and the Coronavirus Job Retention Scheme (CJRS)
HMRC reported record tax revenue of £627.9 billion in 2018-19, an increase of £22.1 billion (3.6%) on 2017-18, this represents more than 95% of the total tax due. The UK’s tax gap, the difference between tax that should be paid and what is actually paid, is at its lowest ever level, and is one of the lowest in the world.
Coronavirus Job Retention Scheme – error and fraud
Back in June, Jim said to the Committee that we expected the schemes to be a target for fraud and criminal activity. Today at the same committee, Jim was asked by Richard Holden MP about how we’re ensuring compliance with the CJRS scheme, and an estimate of the amount of error and fraud.
We would normally use past evidence as a basis for any estimate of future fraud and error. However, given the extraordinary circumstances of the current situation, we do not have this hard evidence, so we have looked at the best available comparisons and analysed other grant and benefit schemes such as Tax Credits. Therefore, we used evidence from the level of fraud in the tax credit scheme to inform our estimate of fraud in the CJRS scheme.
While the evidence from other schemes are the best comparisons available, they are substantively suboptimal, as the people applying for the schemes are very different to employers applying for CJRS. The nature of the threat to the UK economy is also unlike anything we had seen or done before.
With this in mind, we expect the level of error and fraud could range from 5-10% in CJRS. As the scheme and the nature of the threat to the UK economy are unlike anything we have seen before, the estimate needs to be heavily caveated and qualified. This is our estimate of error and attempted fraud after we have already blocked non-compliance by making it more difficult through system design and acting before payments are made. We anticipate our compliance activity will bring this estimate down.
We used these figures to help us to design the scheme and calibrate our compliance work, but it does not directly translate into an accurate estimate of fraud and error. We aim to give updates, using the latest figures available at the end of the year and in Spring 2021. We plan to publish a full and robust estimate of error and fraud in 2022.