Business fraud jumps 42% amid explosion in 'carousel' scams
BUSINESS fraud in the first half of the year was 42 per cent higher than in the same period last year.
The increase has been attributed to an explosion in so-called "carousel fraud" where criminals charge retailers VAT on imported items but do not hand the tax to Her Majesty's Revenue and Customs.
Reported business fraud - 141 frauds of more than £50,000 in value - amounted to £538 million for the first half of 2007. Of this total, £468m - or 87 per cent - was in the form of major VAT and tax frauds.
In the same period last year, there was £379m of fraud and for the whole of 2006 there was only £458m of VAT fraud.
The data was collected by audit, accounting and business services firm BDO Stoy Hayward, which believed recent legislation introduced to crack down on carousel fraud had been ineffective.
New rules mean that VAT on certain items is collected only once they are sold by the retailer, but it is thought fraudsters have simply switched the scam to goods not covered by the law.
The other kind of fraud committed is fraud against businesses. This typically involves employees or directors abusing a position of trust, often in conjunction with an outsider.
Research by BDO Stoy Hayward found that only 15 per cent of such frauds that were detected led to prosecution. The average sentence for criminals convicted of frauds totalling more than £50,000 is just over three years.
Simon Bevan, head of BDO's fraud services team, said: "Sadly, crime does often pay at the moment if you are a fraudster, which explains why large frauds are on the increase. This is a crime driven by greed, not need.
"Professional criminals have been quick to notice the millions that can be made from VAT carousel frauds. While there has been a crackdown, I am sceptical it will halt this avalanche of huge frauds against the taxpayer.
"If you make tens of millions, and then succeed in keeping even a few per cent hidden when you get caught, then you will end up with a small sentence and a large amount hidden in an offshore bank."
According to the research, the English Midlands is the UK's fraud hotspot.
The data was based on information supplied by the Serious Fraud Office, the Department of Trade and Industry and the Metropolitan Police.
0 comments:
Post a Comment