Business owners exploiting the Government’s furlough payout scheme could be taken to court, HMRC’s chief executive has warned as the Treasury faces a £40 billion bill for the programme over three months.

Tax chief Jim Harra admitted that the scheme, where the Westminster Government will pay 80 per cent of employees’ wages if they are put on furlough, had a “range of abuse risks” during a Treasury select committee yesterday.

He urged employees who are put on furlough to report their companies if there are any attempts to make them work while they are supposed to be off, and warned that the scheme could attract organised criminals.

Mr Harra said: “Any scheme that involves paying out money I’m afraid attracts criminals who want to exploit it and also of course attracts the risk that people who are genuinely entitled to it will inflate their claims.”

He told MPs that while the “vast majority” of employers would “use the scheme responsibly and indeed need it for their support” there were a “range of broad and abuse risks that we need to manage and we will be doing our best to do that, but we would be relying to some extent on people giving us information.

“We would also have the right afterwards to go in and check that a claim was correct.” he said.

Alison Thewliss, SNP shadow chancellor, asked what would happen to employers found to be abusing the scheme, to which Mr Harra replied: “We would seek to recover the money from them and depending on the nature of the behaviour, if it amounted to knowingly trying to defraud us then we could take criminal action against employers”

It comes after the British Chambers of Commerce (BCC) announced yesterday that more businesses than anticipated had applied for the scheme, with between 8 million and 11 million workers expected to be put on furlough.

Subsequent analysis by think tank the Resolution Foundation suggested that Chancellor Rishi Sunak should be prepared to spend between £30bn and £40bn on the furlough payments alone over the next three months, if the BCC estimates were accurate.

Last night Mr Sunak defended the job-saving package, saying he was confident the scheme had been designed to “minimise the risk of fraud”.

He also dismissed reports that only £11bn had been initially set aside to cover the furloughed employees’ salaries.

While acknowledging the scheme had been produced “at pace” and that some people may “fall between the cracks” he said “People are saying, ‘Can you not do it this way, can you include us?’, and the reason we’ve not been able to do that is to protect against exactly that. Exactly the risk of fraud or spurious claims that we won’t be able to verify.

“So I’m confident the decisions we’ve made will minimise the risk of fraud.”

The Chancellor also revealed he would be giving £750m to frontline charities after weeks of mounting pressure from third sector organisations and politicians over the lack of support.

And he confirmed Boris Johnson was responding well to treatment while in intensive care.

during the Downing Street press briefing last night, Mr Sunak said that if people were using the job retention furlough scheme, it showed it was working and that it was “a success”.

He said: “When it comes to the job retention scheme, if there are people who are put on that scheme at whatever scale, to me that’s the scheme working.

“We did that so that people were not laid off, they were not unemployed, they had a good income to get them through this and they remain attached to their company and their employer.

“So, if it ends up being significantly used, I will view that as a success, if it means that we get through this and then can bounce back quickly and provide security for those people and their families during it.”

Mr Sunak announced he would be giving charities, particularly those working on the front line, a share of £750m as fundraising efforts dry up and cash reserves are rapidly depleting.

Of this, £30m will go to Scotland, while Wales will receive £20m and Northern Ireland £10m, using the Barnett formula.

The Scottish Government also announced packages of funding for charities and frontline organisations in recent weeks, including the £50m Wellbeing Fund, and the £20m Third Sector Resilience Fund.

Just under half of the UK Government’s cash, £370m, will be allocated to small, local charities “working with vulnerable people” while up to £200m would be given to hospices according to Mr Sunak.

The Chancellor said: “There are nearly 170,000 charities in this country. And the truth is we will not be able to match, every pound of funding that they would have received this year...

“But some charities are on the front line of fighting the coronavirus, and others, provide critical services and support to vulnerable people and communities. Those charities have never been more needed than they are now. And they’ve never faced such a sudden fall in their funding.

“I’m announcing £750 million of funding for the charity sector. £370 million pounds of that will support small, local charities, working with vulnerable people.”

He said cash would be given to frontline organisations such as St John’s Ambulance, the Citizens’ Advice Bureau, and those working with vulnerable children, people suffering domestic violence and disabled people.

Tracey Bleakley, CEO of charity Hospice UK, said: “Hospice UK is delighted that the government is providing up to £200m of funding per quarter to hospices to help support the NHS and respond to the Covid-19 emergency. This incredible government support is very welcome but it’s still important that people continue to support their local hospice”.

The Government has pledged to match the funding raised by the BBC’s Big Night In programme for Comic Relief and Children in Need, due to air on April 23.

But Labour’s shadow Chancellor Anneliese Dodds MP, said the package was not enough to plug the “financial black hole” many charities were now facing.

She said: “Labour has been calling on the government for some time to provide charities with additional financial support, and while this announcement is welcome it falls far short of filling the financial black hole many organisations are facing. Ministers should continue to look at what additional measures can be made available.

“We must also see concerted action to guarantee this support can get to charities swiftly to prevent further damage being done.”

The Liberal Democrats acting leader Ed Davey also urged the Government to do more for charities.

He said: “The £750million will undoubtedly help, but Ministers must be honest and admit it won’t come close to making up for the £4.3 billion of income charities will have lost in just 12 weeks.

“Liberal Democrats are calling on the Government to fund charities properly, especially those smaller local charities that are close to their communities. If Ministers do not, many charities will simply not be able to help the most vulnerable in society, with potentially devastating long term consequences.”

Scottish Secretary Alister Jack said the funding reflected the “tremendous amount” of work done by volunteers and charities to help, particularly during the virus pandemic.

He said: “The UK Government has set out a generous funding package for charities, which means an extra £30 million for the Scottish Government. I hope they will use that to support the incredible army of volunteers working so hard across Scotland to support those in need.

The Chancellor confirmed that the Prime Minister was “responding to treatment” after spending a third night in intensive care.

Mr Sunak said “He is receiving excellent care from the NHS team at St Thomas’. The latest from the hospital is the Prime Minister remain in intensive care where his condition is improving. I can also tell you that he has been sitting up in bed and engaging positively with the clinical team.

“At the end of the day, we’re all trying our absolute best, none of us are superhuman and impervious to getting sick during this process and that’s what makes this whole thing so awful for all of us. But as I’ve seen, the advice, the care has been excellent, not just beforehand but especially now at St Thomas’.”

A Downing Street spokesman added that the PM “continues to make steady progress.”

Meanwhile, on lockdown measures the Government continued to suggest they cannot be relaxed until the peak of infection is reached.

According to the Prime Minister’s official spokesman, a review will still go ahead next week but not necessarily on Monday as previously expected. Foreign Secretary Dominic Raab said on Monday it was “too early” to relax measures, and urged people to stay at home.