Almost 10% of the money handed out by government during the Covid-19 Eat Out to Help Out scheme was claimed fraudulently or in error, a parliamentary committee has been told.
HMRC chief executive Jim Harra told the Treasury Committee that Eat Out to Help Out recorded higher rates of fraud and error than the other two major support schemes launched in response to the pandemic to help furloughed and self-employed workers.
The Eat Out to Help Out scheme saw the government subsidise 50% of the price of food and drinks at participating hospitality venues in August 2020. The committee was told that £850m was paid out by government, about £70m of which is believed to have been claimed fraudulently or in error.
Harra said: "We were dependant on cafes and restaurants declaring the correct amount to us. We had a lot of protection to make sure it was only businesses recognised that could access this scheme. We have also done post-payment compliance work so for example I am aware of one case where a restaurant claimed to have a record month in sales as the same time as they were claiming to have furloughed all their staff.
"The vast majority [of venues] claimed correctly but we did see a higher rate of error and fraud in that scheme than in the other two schemes we administered, although it was a much smaller scheme over a much more contained period of time.
"We did make some early arrests and actually we can see shortly after we made those arrests, we got quite a few voluntary disclosures from restaurants who told us they had made a mistake in their claim."
While the rate of error and fraud seen in relation to the Eat Out to Help Out scheme was higher than others, the amount paid out was less due to the short period of time it was in operation. Across all three support schemes £4.5b is believed to have been paid out in error or following fraudulent claims.
Harra said a team will continue to investigate such claims until at least April 2023 and it is estimated £1.1b will be recovered. Some 50,000 claims have been flagged for investigation.
Where errors are found in the claiming of support Harra said if money is paid back promptly then no further action would be taken in most cases.
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