The Government’s out-of-date systems have allowed people to fall through the cracks for Covid support and made it harder to assess levels of fraud, a group of influential MPs have found.
Meg Hillier, who chairs the Public Accounts Committee (PAC), said that many workers had been left behind by Government support schemes because HM Revenue and Customs has old tax systems.
“As public spending balloons to unprecedented levels in response to the pandemic, out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support,” she said.
“And the system is going to struggle, and in many cases fail, to capture or deal with those wrongly claiming it.”
She was speaking as the PAC on Wednesday released a report urgently calling on HMRC to explain why some taxpayers have had no support during the pandemic.
This has impacted some people who should have been eligible for furlough payments, including some of the self-employed and freelancers.
At the same time, while some have been left without any income, there are several examples of large companies which have taken support from the Government, yet continued to pay out dividends to shareholders and high salaries to executives.
The PAC called on HMRC to explain, within six weeks, why it cannot help some freelancers and other groups who have been left out of support and consider how it can support others who have fallen through the cracks.
The Government said: “We do not underestimate the challenges faced by individuals and businesses during the pandemic, and our top priority is getting financial support to those struggling with the economic impact, while protecting the taxpayer against fraud.
“Those not eligible for support through these schemes can still benefit from the strengthened welfare safety net, accessing help like Universal Credit.”
It added: “The Government has done all it can to help as many people as possible, providing support worth more than £280 billion and adapting our schemes to include as many people as possible – for example, by extending the cut-off date for the Coronavirus Job Retention Scheme, bringing in more than 200,000 employees to the scope of the scheme. HMRC delivered Covid-19 support schemes at unprecedented speed, protecting the livelihoods of millions of people.”
The MPs also said that tax officials too often struggle to come up with timely and reliable financial estimates, which can be vital for planning.
The committee pointed to the Coronavirus Job Retention Scheme, for which HMRC is still “some way off” being able to assess the level of error and fraud. It only has a planning estimate of between 5% and 10%.
More than £46 billion has been paid out under the scheme.
The tax officials also have no estimates on error and fraud in the £849 million Eat Out To Help Out scheme, which picked up part of 160 million restaurant bills in August.
The department’s estimates of corporation tax revenue were also retrospectively amended by £6.6 billion in the financial year ending last March, another mistake of financial estimates, the MPs said.
Ms Hillier said: “HMRC needs to redress the balance in its spending and use of tech, and get ahead on the basic financial and economic metrics that we need to adapt and respond to this pandemic in real time.
“There is also a huge question about how our customs and revenue technology at the borders is coping, and will cope in the months and years to come. There isn’t really any breathing space – HMRC’s out of date systems need to catch up fast.”