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Tax fraud costs the UK £15 billion a year

Fraudsters drain a total of £38 billion a year from UK economy, government report reveal.

 

The size of scams in rip-off Britain were revealed in a new government report, published today.

Tax fraud is the highest individual public sector fraud loss area, according to the report published by The National Fraud Authority, the Government's organisation on counter-fraud activity.

Tax fraud costs the UK an estimated £15 billion each year, the report said. This figure includes criminal attacks at £5 billion, evasion at £7 billion and losses resulting from the hidden economy of £3 billion. Benefit and tax credits fraud account for seven per cent of public sector fraud, which together are £1.5 billion a year.

In total, fraud costs the UK over £38 billion a year, the report said.

Over half of all UK fraud is from the public sector. At £21 billion the public sector is to blame for 55% of the total figure. However, the report claimed this is partly because public officials are more diligent in reporting fraud.

Minister for the Cabinet Office, Francis Maude, said: 'The latest National Fraud Authority estimate shows that 55% of fraud - a massive £21 billion - is committed against the public sector. That's the equivalent of building 800 secondary schools, or employing over 615,000 nurses and it's a problem that we are not going to ignore. Ripping off the taxpayer will not be tolerated.'

Private sector fraud losses of £12 billion make up 31% of the total annual figure.

In the private sector, the financial services industry recorded the highest loss to fraudsters at £3.6 billion. This report said this was a slight decrease on last year due to improved fraud prevention methods involving plastic card - at £440 million - and cheque fraud, which costs £30 million.

Online banking, however, has seen an increase of 14% at £60 million.

Mortgage fraud at £1 billion, and insurance fraud at £2.1 billion remain high.

A new inclusion in the annual report is fraud losses to SMEs at £780 million. The NFA and the Federation of Small Businesses (FSB) worked together to produce this estimate - the first of its kind.

Individual citizens' losses equated to 10% of the overall fraud figure at £4 billion, covering loss from mass-marketing fraud such as share sale, lottery and advanced fee frauds as well as newer frauds such as online ticketing and rental fraud. 

3 comments so far. Why not have your say?

Gristybeasty

Jan 27, 2011 at 14:21

So, will anything be done about it? I would like to be positive but, ain't! We hear and read so much about fraud but little appears to happen to combat it...sucks!!!!

report this

Malcom jones

Jan 27, 2011 at 20:48

What about all the self employed tradesmem that are pocketing cash for work they have done without declaring it,

report this

Anthony O' Grady

Jan 27, 2011 at 22:23

In2005 hmrc had circa 100000 staff. By 2015, after 10 consecutive years of cuts that figure will be 60000. What sense does that make?

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