The figure is up fourfold from the previous year’s £336m, when fraud was only attributed to 3.6% of claims, it now accounts for a disturbing 17% of total claims.

In the last year HMRC has frozen thousands of claims from smaller businesses as it tries to stamp out the high levels of fraud.

The majority of the non-compliance is in the SME scheme, where error and fraud for 2020-21 is estimated as 24.4%. HMRC said there was much clearer oversight of larger businesses where fraud was highly unlikely to occur.