Viral figures on benefit fraud and tax evasion are wrong

31 March 2023
What was claimed

Only 552 people are employed by HMRC to investigate tax evasion, while 4,045 are employed by the DWP to investigate benefit fraud.

Our verdict

These figures don't appear to be correct. We've not been able to find a precise breakdown of how staff are allocated, but the DWP employs more than 9,000 in its counter-fraud department, while HMRC has around 28,000 staff in its customer compliance department.

What was claimed

Losses from tax evasion are £35 billion each year.

Our verdict

False. HMRC estimated the ‘tax gap’ to be close to this amount in 2019/20, but this also includes losses due to error, tax avoidance and other behaviours. The latest published figures are for 2020/21, when it was estimated £4.8 billion was lost to tax evasion.

What was claimed

The estimated cost of benefit fraud is £2.5 billion a year.

Our verdict

This figure is out of date. The latest published estimate, which is for 2021/22, was £6.5 billion.

A post on Twitter from March 2023, which has also been shared in the same month on Facebook, makes a number of inaccurate claims about benefit fraud and tax fraud. 

The tweet says: “HMRC say the country loses £35 Billion every year in tax evasion by super rich companies and individuals. DWP claim the country loses £2.5 Billion per year through benefit fraud. Why then do government employ 4,045 people to tackle benefit fraud but only 552 tackling tax evasion!”

Full Fact has found identical versions of the claim which have been in circulation since at least 2019

Some of the figures in the post are incorrect or now out of date. It suggests that losses through tax evasion are greater than those from benefit fraud. In fact, in 2020/21—the latest year for which we have comparable data—the opposite is true, while figures given for the number of people employed to investigate tax evasion and benefit fraud do not appear to be correct. 

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Cost of fraud

The posts claim that HM Revenue and Customs (HMRC) estimates £35 billion is lost to tax evasion each year. This is incorrect. However, this figure roughly matches the size of the “tax gap”—the difference between the amount of tax actually collected and the amount theoretically due—during 2019/20

Of this total, £5.2 billion was due to evasion. A further £1.2 billion was lost to tax avoidance

The most recent figures, which are from 2020/21, estimate losses due to evasion amounted to £4.8 billion, with a further £1.2 billion lost to avoidance. 

The posts also claim that £2.5 billion was lost to benefit fraud. This is close to the £2.7 billion lost in 2019/20, but the figure has increased substantially since then, with government statistics showing fraud amounted to £6.5 billion during 2021/22. In 2020/21, the equivalent figure was £6.3 billion, which is more than the £4.8 billion lost to tax evasion that year. (It’s worth noting that much of the increase in benefit fraud that year may be due to the pandemic which, according to the Public Accounts Committee, “opened-up new weaknesses” in the benefits system.) 

Staff numbers

The post’s figures about staff numbers also don’t appear to be correct, though we’ve not been able to find precise breakdowns of the work that Department for Work and Pensions (DWP) and HMRC staff do.

The claim that there are 4,045 benefit fraud investigators employed by the DWP seems to date back to 2017. In answer to a written parliamentary question in October of that year, the government said that was the equivalent number of full-time employees working in this area at that time. 

In its 2019/20 annual report, the DWP said its Counter Fraud, Compliance and Debt (CFCD) department employed 8,000 staff. However, they do not spend all their time on fraud cases as they also deal with errors, verification checks and compliance, ensuring people are entitled to the benefits they are receiving. 

The most recent edition of the DWP’s annual report notes that funding was increased in order to recruit additional staff to work in the counter-fraud department, bringing the total to an equivalent of 9,500. 

It’s possible the figure of 552 tax evasion investigators comes from the number employed by a specialist unit dedicated to pursuing high-net worth individuals in 2017 (which was actually 522). 

However, this represents only part of the total number involved in investigating tax evasion. 

Asked about how many staff investigate tax evasion, an HMRC spokesperson told Full Fact that, as of the summer of 2022, its Customer Compliance Group employed around 28,000 people. However we don’t have a breakdown of how many of those staff are solely dedicated to tax evasion cases rather than assisting with other tax matters. 

We have written about similar claims before. 

Image courtesy of Towfiqu Barbhuiya

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