Figures obtained through a Freedom of Information (FOI) request revealed that in the financial year to the end of March 2021 HMRC blocked 3,578 claims for furlough money, totalling £28.5m. Over the same period, HMRC paid out £61billion through the scheme.

With an estimated £5.3bn paid out due to fraud and error, HMRC has stated that much of the fraud that arose was ‘difficult to detect upfront’ such as employers claiming furlough money for employees who continued to work, either voluntarily or at their boss’ orders.

The tax authority also stated that it had put in place checks to stop criminal gangs from obtaining money through the system with only 0.3% of the furlough grants estimated to have been lost to organised criminals.

In a statement to Accountancy Daily, an HMRC spokesperson said: ‘We were clear from the outset that the Coronavirus Job Retention Scheme would be targeted and that a small minority would seek to exploit the scheme.

‘The schemes had compliance designed into them from the start, for example by using existing processes and verifiable data in order to minimise the risk of fraud and error. This proved critical in our ability to block claims from, for example, fictitious companies which we knew to be attempted fraudulent claims.’

HMRC is currently working to recoup the money lost to fraud through the Covid-19 support scheme with the taxpayer protection taskforce expected to recover £1bn from fraudulent or incorrect payments over the next two years. This is on top of the £500m already recovered in 2020-21.

The tax authority told Accountancy Daily that it was not ‘looking to find every small error or mistake’ as this was ‘not a good use of taxpayer money, nor in line with the support which we’ve been offering customers’.

Defending the stance it took in the pandemic, HMRC said that the government expected all employers who used the scheme to do so in good faith and in line with the clearly set out rules and guidance published by HMRC with the majority of those who accessed the scheme ‘did the right thing and claimed what they were entitled to’.

It also stated that it ‘did not slow down payments for other people as to do so would have held up monies reaching desperate people’.

HMRC confirmed that it is to update and refine its financial estimates when it obtains more data on fraudulent behaviour relating to the scheme and with the investigations it completes.

The job retention scheme, which was one of three state coronavirus support programmes run by HMRC, paid out £70bn in wages to millions of workers from March 2020 until it closed in September 2021.