A builder from Bordon, a nurse and a personal trainer both from Southampton, a bookkeeper from Portsmouth, an independent financial adviser from Winchester and a yacht broker from Bournemouth were amongst cases of reported fraud in Hampshire and Dorset last year, according to BDO’s Fraud Track research.
The accountancy and business advisory firm’s analysis, which examines all reported fraud over £50,000, sees the cost of fraud overall in London and the South East fall from nearly £879 billion in 2011 to just over £625 billion in 2012.
Across the UK, the value of total reported fraud in 2012 has fallen by a third to £1.37bn. However tax fraud, totalling £603m alone, has doubled in the last two years.
Third party fraud (involving suppliers, customer etc.) was down from nearly 30% in 2011 to just 4.5% in 2012 which may be as a result of the Bribery Act which came into force in July 2011.
Mike Mason, Southampton-based director, Barrister and specialist in fraud services at BDO UK, said: “It is clear from the relationships we have with businesses in the region that they are intent on stamping out fraud. However fraudsters are still taking advantage of internal control weaknesses, most of which can be prevented by some simple and robust measures that are all too often overlooked in the race for increased revenues and profits.”
This year’s Fraud Track figures show that VAT fraud alone accounts for 41 percent of the total UK fraud figure. The current UK VAT gap, the theoretical difference between what the Government expects to collect in sales tax and what it actually collects, is around £10bn with fraud accounting for approximately one third of this figure.
To put this in real terms, if a third of the UK VAT gap is due to fraud, that equates to £3.3bn missing from the public purse every year – equivalent to at least one pence off the effective rate of tax for every UK taxpayer. This amount (£3.3bn) would pay for the winter fuel allowance, free TV licences and compensating pensioners on the pensions credit (£1.4bn) and still leave enough to build 17 new hospitals (£1.9bn/£113m).
BDO’s Mike Mason comments, “The fact that tax fraud, and VAT fraud in particular, accounts for such a high proportion of overall fraud, is evidence of HMRC seriously under-resourcing their anti-fraud function.”
Having dominated fraud figures in the last few years the finance and insurance sector appears to have made substantial strides towards combating fraud, reporting its lowest level of fraud in five years at almost £0.5bn in 2012. Topping the tables as the industry most susceptible to fraudulent activity is public administration (£615m).
