UK fraud up by 40 per cent in 2006
Carousel fraud sees high increase in activity
Fraud rocketed in the UK by almost 40 per cent in 2006 because of the increase in VAT carousel fraud activity, according to BDO Stoy Hayward’s annual FraudTrack report.
The market watcher estimated the value of fraud to be about £1.37bn, compared with just under £1bn in 2005, but claimed that because only 15 per cent of UK businesses report incidents of fraud, the real cost could be closer to £5bn.
Simon Bevan, the national head of BDO Stoy Hayward’s fraud services team, told CRN: “Carousel fraud – which is prevalent in the mobile phone, chip and components industry – will continue, but the government is trying to stamp it out. This type of fraud is generally linked to organised crime gangs rather than white-collar workers in the IT industry.”
The report claimed the main motivators for fraud were greed and a desire for a lavish lifestyle. In addition, 82 per cent of fraud was carried out by men.
Bevan added that most firms do not see the prosecution of fraudsters as a priority, but are more concerned with ensuring the fraud is not repeated. He said the police also do not place business fraud at the top of their agenda, which can dissuade a lot of firms from pursuing a suspected crime.
Separately, the Federation of Technological Industries (FTI), which represents UK chip, components and mobile phone dealers, has claimed more than 300 firms are still waiting for their VAT repayments from the government, following its crackdown on VAT fraud in the industry.
As a result, the FTI is organising a group action under the Judicial Review Protocol to challenge what it claims is the ‘unlawful actions’ of HM Revenue and Customs (HMRC).
HMRC said in a statement to CRN: “Our response has been proportionate, targeted and risk-based. We are actively checking a greater number of suspect c laims, however as soon as we have satisfied ourselves that even part of the claim is valid, we repay it immediately.
“We have defended our actions in the Court on numerous occasions. The courts have found that our policy is reasonable and that we are not taking too long to process the claims.”