The UK's taxman has vowed to recover more than £1 billion in fraudulent or incorrect Covid support pay-outs.

HM Revenue and Customs (HMRC) has said its Taxpayer Protection Taskforce is expected to recover £1 billion in the next two years from fraudulent Covid claims or payments made by mistake. It has said it already has 23,000 active investigations.

HMRC's statement was prompted by reports that £5.5 billion in payments from government coronavirus assistance schemes – such as furlough payments, support for the self-employed and Eat Out to Help Out – should not have been made.

HMRC's annual report has acknowledged that approximately 8.7% of the £60 billion paid out under the furlough scheme in the 2020-21 tax year went to organised crime gangs or fraudsters or was given out in error. A further £490 million was paid to fraudulent or incorrect claims under the Self-Employment Income Support Scheme, with £70 million being paid out mistakenly under Eat Out to Help Out.

HMRC has said the schemes were created at speed to help those in serious need. It said efforts were now underway to identify fraudulent and mistaken claims.

While the majority of such cases that HMRC investigates may result in civil interventions, HMRC's selective prosecution policy will allow it to consider criminal investigations regarding professionals and others in positions of trust who engaged in tax fraud. HMRC may be especially keen to take such action if it feels it needs to send out a strong deterrent message to anyone who has considered the potential for making fraudulent gains from the Covid-19 relief schemes or other forms of state payments.

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