Jim Harra, a chief executive of HMRC, said his staff believe between five and 10 per cent of furlough cash might have been sent to ineligible claimants.
The Government has so far paid out £35.4 billion in furlough cash, according to the latest figures.
It means that somewhere between £1.75 billion and £3.5 billion could have been paid out wrongly, wrongful claims ranging from ‘deliberate fraud through to error’.
On Monday, Mr Harra said that ‘Although we will expect employers to check their claims and repay any excess amount, but what we will be focusing on is tackling abuse and fraud’,
It’s the first time that HMRC has spoken publicly about the level of potential fraud that could have been committed as part of the job retention scheme, which has covered up to 80 per cent of an employee’s salary while they were on furlough.
Furlough is now winding down and is expected to end for good next month, however businesses which bring staff back from furlough will receive another £1,000 if the employee is still in work by the end of January.
By August 16 this year, 9.6 million people had been put on Government-supported furlough, with 1.2 million employers claiming the support.
Meanwhile, around 2.7 million self-employed people have claimed around £7.8 billion in support from the Government.
Mr Harra said that an academic study has estimated that the level of fraud and error might be even higher than 10 per cent.