Business News
Serious fraud crime hampering Government’s efforts to bring UK finances into line
Financial crime and in particular serious fraud crime has become a huge blot on the Government’s efforts to bring the UK’s finances into line with very bleak statistics.
Whilst the number of actual cases brought to court has decreased, the monetary value of those cases has nearly doubled from 2009-2011 from £8m to £18m. Frighteningly, the Fraud Barometer shows that the sheer level of fraud has soared from £286m to £693m in only a relatively short space of time from 2009-2011. In addition, the barometer also reveals that the HMRC department accounts for £1.2bn out of the £1.5bn value of fraud committed between April 2008 and March 2010.
Jeremy Outen, UK Head of Fraud at KPMG who made the findings said: “Financial criminals are now becoming more business-like and methodical. The current generation of organised crime is targeting fraud - making payment systems, such as banking, tax and benefits vulnerable to attack.
“Traditionally, criminals have relied upon physical acts, such as robbery - they can now commit a fraud and achieve the same returns for much less risk. This is fuelling the audacity and ambition of professional criminals, driving up the size of a fraud. In addition, technology and large scale processing (such as online or call centres) have made large scale frauds easier to accomplish.”
Of the £1.5bn relevant to HMRC, VAT fraud accounted for £735.7m, tax rebate was a whopping £73m over 6 cases alone, money laundering a cool £200m and “green” tax fraud a comparatively smaller £141m.
On tax rebate fraud, Outen said: “Many companies depend on the timely receipt of tax rebates to help cash flow – which are sometimes relied upon to keep businesses afloat. Fraudsters are targeting these very same funds, ensuring the process becomes more difficult for both the government and the genuine recipient.”
Even carbon offset tax and emissions tax have not stayed safe from the ever business-minded financial criminal, who have become more focused, knowledgeable and integrated in society.
There are of course, the practical costs of fraud; in catching and convicting fraudsters there is the often-huge bill at the end of it all. Last year alone, three large money laundering cases cumulated in a tab of £200,657,000.
Other notable findings include;
- Tax fraud – the majority of fraud carried out since 2009, 114 cases brought to court in the last year, a 68% increase from 2008/09 to 2010/11
- A rise in management fraud brought figures up to £133m in 2010/11
- Customer fraud has soared from £2.5m to £25m in only 3 years
Following more than £1bn worth of fraudulent and incorrect tax payments being stopped in 2010/11, Chancellor, George Osborne told the House of Commons that HMRC had hit its target for March 2011, decreasing the amount it pays out incorrectly by 60% in 12 months, and that they had put together a Counter Fraud Strategy to tackle increasingly sophisticated attacks across the tax and credits system.
A report compiled by HMRC (HMRC 2009/10 Accounts) has revealed success in disrupting a major criminal organisation behind attempts to falsify claims of income tax self assessment repayment and that through stringent operational activity and tactical intelligence, gained a real and increasing risk of the UK becoming a major target for a form of VAT repayment fraud in connection, with trading of emissions allowances (carbon credits) is obvious.
By introducing new legislation and continuing to supply already successful operational techniques, HMRC has tackled this head on and will continue to do so.
