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Tax evasion costs Treasury 15 times more than benefit fraud

Tax evasion costs the Treasury £15.2 billion in lost revenue, while benefit fraud costs £1.1 billion every year.

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by Deborah Hyde on Jan 22, 2010 at 09:55

At £30 billion per year, fraud in the UK is more than twice as high as thought, with tax evasion costing the public purse over £15 billion per year and benefit fraud just over £1 billion.

Based predominantly on 2008 data, the National Fraud Authority’s first ever Annual Fraud Indicator found fraud against the public sector accounts for 58% of the total fraud in the UK per year.

Tax evasion is around 3% of total tax liabilities, while benefit fraud accounts for 0.8% of total benefit expenditure.

In the private sector, the report shows the financial services industry recorded the highest loss to fraudsters, estimated to be £3.8 billion, with £1 billion in mortgage fraud and over £2 billion lost in insurance fraud.

The consumer goods and manufacturing industry are estimated to have lost £1.3 billion and £1 billion respectively.

Credit and debit card fraud is estimated to be 0.1% of all transactions.

Fraud - such as share sale fraud and lottery and loan scams - cost consumers around £3.5 billion per year, the report's author said.

Attorney General Baroness Scotland, who superintends the NFA, said: 'The NFA Annual Fraud Indicator is a milestone in tackling fraud. It means we now have a much more accurate fraud picture which is crucial so we can better target fraudsters.'

But she said more organisations need to measure and report the money they lose to fraud.

The government and the NFA have already promised to take a hard line on fraud and the government sett up a task force which hopes to reduce the impact of fraud on the public purse.

The NFA recently launched Action Fraud, the UK's first national fraud reporting centre, where victims of fraud can both report fraud and seek guidance and advice.

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11 comments so far. Why not have your say?

After a visit to the The Portland Hospital for Women and Children for my wife’s smear test the freelance consultant not only overcharged us from the price provided over the phone at the time of appointment but had also asked us for money, cash in hand after the consultation was finished.

I brought this issue to Peter Curtis Chief Executive Officer who replied to me stating that it is not the hospitals problem as he is only a consultant there.

I also did not see anyone interested about it at the time (Dec 2008) as I have tried to report this Doctor to various authorities, as he is obviously one of the fraudsters being spoken about in this article, but I will never forget it.

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I am confident that both figures are grossly understated and enforcement should carry a far higher priority than it does at present. Benefit fraud is extremely demoralizing for those taxpayers having to pay higher taxes due to a lack of enforcement. In addition, cheating conducted with impunity develops a culture of cheating and fraud and it soon becomes the norm for generations. If it costs £1.1 billion annually to police effectively, it would repay society handsomely.

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How many people out there have sometime in their lives paid or received cash in lieu of work done.

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I wonder how many honest corporations and individuals pay the wrong amount of tax and pay fortunes to accountants because the system is so mind bogglingly complicated. We now have a tax code twice as complicated as 1997.

One easy way to reduce evasion, is simplify the tax system to ensure honest citizens do not have to pay accountants to complete their returns for fear of unintentionally become criminals.

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And the members of parliment cost the tax payers a fortune to pay for their lunches and dinners and buying their clothes and TV's and paying their council tax and also paying for the spin doctors that try to make them look good....yet....they are complete idiots...

Or are we the idiots for funding their lifes?

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Tell me...the writer of this article Deborah Hyde, i wonder if she also manages as a self employed person claim a clothing allowance and also petrol to get to the office and a claim for lunch and dinner?

As a PAYE taxpayer, i am not entitled to anything, but the law is changing to allow Deborah Hyde to claim sick pay and holiday pay, yet i have to pay for me suit to wear to the office, and she claims that back in her returns.....is this fair? NO WAY

If u as a self employed person want sick pay and holiday pay, then u buy your own bloody clothes and lunch....and stop mugging the rest of us......Get on with it and please stop writing pathetic articles like this one, because you are no different to the ones you write about

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..judging by a few comments on here!

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Nobody could possible know the true totals in either category so this estimate is meaningless, like most things this Socialist government says and does. The department of guesswork in action again.

I think any underpayment of tax is probably countered by a lot of people too fazed by the mind-boggling complexities of Broon's tax "system" to claim all their allowances. One of the biggest rackets is the "on the sick" scam, whereby millions of able-bodied people are able to lounge about all day smoking fags and watching TV. I personally know a number - and they are well able to work in many cases. This is the great unreported scam of our time.

One such specimen recently offered to "work" for me, having materialised outside his home in his dressing gown at about noon, fag in hand. Cash would have done nicely, guv. I left him to his appointment with a social worker and hired a team of Poles instead. And yes, their pay was logged and reported to the tax authorities.

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Cockney dave: self employed can claim for nothing that is not wholly for the business. Travel to and from work is not allowed, neitehr are clothes. Also, self-employed peope take risk that employees don't and are not eligible for most of the social welfare people like you are.

As to the article itself: Where do these figrues come from and how can they prove them ? ON what basis are they defining fraud? If a neighbout babysits for you and you giver her a fiver, is that fraud?

Just waht are they calling fraud and how do they calculate this.

The problem with this article is that it is just forwardig on to us an opinion of someone in government - effectively regurgitating propaganda. I would expect the author to investigate and explain it.

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Re the figures for tax fraud, they are - inevitably - pure guesswork. And with a new agency like this, anxious to demonstrate just how necessary it is in the scheme of things, there will have been some overegging of the pudding.

It is arguable, of course, that the money diverted from the public purse is put to better use than it would be in the hands of the Government.

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Mike Allan

Jan 23, 2010 at 22:57

I suspect hat both figures are dwarfed by tax avoidance schemes that were never envisaged when legislation was enacted and would have been made illegal had anyone imagined the shemes at the time.

A thought for Hugo. Did you try the HMRC?

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