In evidence to the public accounts committee (PAC), HMRC CEO Jim Harra told MPs the department had made an assumption for the purposes of planning that the error and fraud rate in this scheme could be between 5% and 10%.

Latest government figures indicate around £35bn has so far been spent on furlough payments, so potentially between £1.75bn and £3.5bn could have been paid out incorrectly.

Since its launch in April, 1.2m employers have used CJRS to furlough 9.6m jobs, representing 32% of eligible employments for at least part of the period between March to June.

Harra told the PAC: ‘We are not going to set out to try and fine employers who have made legitimate mistakes in compiling their claims because this was obviously something new that everyone had to get to grips with in a very difficult time.’

Instead, HMRC will be writing to employers to give them the opportunity to correct mistaken claims and repay excess amounts.

Harra said HMRC’s hotline for reporting furlough fraud had received 8,000 calls so far. In total the tax authority was investigating 27,000 ‘high-risk’ claims.

Furlough is now winding down and is expected to end for good next month. However, businesses that bring staff back from furlough will receive another £1,000 if the employee is still in work by the end of January.