Tax fraud has reached its highest level since the start of the financial crisis, with an estimated £3.3 billion in VAT revenues lost to the government each year, according to accountants BDO Stoy Hayward.
BDO's FraudTrack report said VAT fraud had grown due to a lack of resources at HM Revenue & Customs (HMRC), The Telegraph has reported.
It estimated that around half of the fraud was due to professional fraudsters, with the rest down to non-compliance and evasion by legitimate businesses.
HMRC last week published the details of the biggest tax frauds of 2012. The perpetrators have received a total of 155 years and 10 months in jail.