Up to £3.5 billion could have been paid out in wrong or fraudulent claims for the Coronavirus Job Retention Scheme, the government suspects.

Jim Harra, the top civil servant at HMRC, said that his staff believe between five per cent and 10 per cent of CJRS cash might have been sent to the wrong places.

“We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between five per cent and 10 per cent,” the permanent secretary told MPs on the Public Accounts Committee.

Mr Harra said that an academic study has estimated that the level of fraud and error might be even higher than 10 per cent after the Government has so far paid out £35.4 billion in CJRS cash.

It is estimated that between £1.75 billion and £3.5 billion could have been distributed incorrectly.