Up to £3.5bn in Coronavirus Job Retention Scheme payments may have been claimed fraudulently or paid out in error, the government has said.
Latest data shows the programme has cost the government £35.4bn so far.
The scheme has paid 80% of the wages of workers placed on leave since March, up to a maximum of £2,500 a month.
Speaking to MPs on Monday, HMRC’s permanent secretary, Jim Harra, said: “We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5% and 10%.
“That will range from deliberate fraud through to error.”
The Public Accounts Committee estimates that a total of £30bn in tax was lost in 2019 due to taxpayer error and fraud.
“What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time,” said Mr Harra.
“Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud.”
So far, 8,000 calls have been received to HMRC’s fraud telephone hotline. HMRC is now looking into 27,000 “high risk” cases where they believe a serious error has been made in the amount an employer has claimed, he added.
“While we can’t get involved in any relationship between the employee and employer, we can certainly reclaim any grant that the employer is not entitled to, which includes grants they have not passed on in wages to their employees.”
Swetha Ramachandran, investment manager at GAM Investments, said: “The speed with which they wanted to expedite this programme in order to ensure that this was available to employers, to minimise the damage that could have been caused, means there was always a likelihood that this was going to happen.
“So I don’t think it’s that surprising.”
“That won’t probably emerge for a few months,” she added.
The think tank said the government’s financial rescue scheme were vulnerable to scams because of the size of the packages and the speed at which measures were rushed through to save people and businesses from economic ruin.
It said: “This is a serious squandering of public finances and properly resourced post event assurance will be required to reassure the public that every possible step has been taken to reduce this level of fraud.”