Wrongful Claims for U.K. Furlough Cash Could Total $4.6 Billion

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The U.K.’s tax authority estimates that companies have submitted as much as 3.5 billion pounds ($4.6 billion) of fraudulent or mistaken claims for furlough cash.

The revelation was made on Monday in testimony to the House of Commons Public Accounts Committee by Jim Harra, chief executive of Her Majesty’s Revenue and Customs.

The disclosure will raise concerns that taxpayers’ money has been wasted as the Treasury rushed out a succession of assistance programs to help businesses and workers weather the lockdown imposed to stop the spread of coronavirus.

Harra told lawmakers that officials are planning on the assumption that somewhere between 5% and 10% of claims under the flagship Coronavirus Job Retention Scheme were wrongfully submitted.

“That will range from deliberate fraud through to error,” he said. “We are not going to set out to try and fine employers who have made legitimate mistakes.” HMRC’s focus, he said, is tackling “abuse and fraud.”

Chancellor of the Exchequer Rishi Sunak has already admitted to “deadweight” in some of the programs, which will cost an estimated 192 billion pounds this tax year.

So far, the furlough program -- under which the government paid as much as 80% of the wages for more than 9 million employees -- has paid out over 35 billion pounds.

Separately, Harra said the Eat Out to Help Out program, under which the government subsidized restaurant meals in August, had achieved its objective in terms of reassuring people it was safe again to eat in restaurants. But he said it’s yet to be determined whether the initiative delivered value for money.

©2020 Bloomberg L.P.

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