To look at this, this HMRC report, from 2023, looked at claims in 2020-21. They say that there has been reforms since then. Here are the findings from " based on 97% of cases in the MREP with a finalised compliance audit" :
As the final row shows, 16.7% of claims, representing over £1b are error and fraud.
An updated table, published in October 2024, gives more current data, based on estimates
And some examples of this in action are by Dan Neidle, here for example on claiming R&D tax credits from footballer wages.
Returning to the 2023, report, some comments from the report
Analysis of the MREP shows that around half of all claims, by volume, contained at least some element of non-compliance. HMRC found fraud indicators in fewer than 10% of claims examined in the random enquiry programme and these claims accounted for less than 5% of the total value claimed. To be classified as fraud, a caseworker needs to have found evidence that the claimant deliberately set out to misrepresent their circumstances to get money to which they were not entitled.
This indicates that the majority of non-compliance is down to other behaviours. As with other regimes, the term ‘non-compliance’ or ‘error and fraud’ encapsulates this full range of behaviours, from mistakes and failure to take reasonable care through to deliberate non-compliance.
In claims where expenditure was over £1 million, around 75% of claims were fully compliant. In smaller claims the percentage of claims being fully compliant was lower, at between 35% and 64%.
As the size of expenditure decreases, the value of non-compliance expressed as a percentage of the value of the claim increases. In the smallest claims where expenditure was less than £10,000, over 75% of the value of the claim was non-compliant.
