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Tax evasion costs Treasury 15 times more than benefit fraud

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.

8 comments so far. Why not have your say?

Man in Black

Jan 22, 2010 at 11:55

This is a non-story.

The story you should be reporting is the fact that the benefits bill is much greater than income tax receipts.

Cut tax rates and stop stealing money from people who work and try and earn a living. Then people might be more inclined to pay at the lower rate.

Cut benefits and stop the benefits culture. Then more people might work...and pay their taxes.

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Man in White

Jan 22, 2010 at 12:51

Tax evasion is dishonest - of course given the behaviour of the financial institutions and legislators perhaps Man in Black now sees this as acceptable.

What is the source for the statement " the benefits bill is much greater than income tax receipts"

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Andrew Baker

Jan 22, 2010 at 13:33

Fraud is in the eye of the beholder: MPs looking after their ducks and claiming for no-longer existent mortgages, as examples, have not committed fraud - they told us - but operated within the rules. Revenue & Customs may have had a problem if you or I had claimed either as a business expense, and would probably have suggested that there was a fraudulent claim.

There are rules for the plutarchy and rules for us: and fraud isn't fraud at the top end of society, even when you get caught out, as the MPs did.

Politicans rob us through legal taxes, and re-direct the money through State spending including benefits payments. Much tax is excessive, IMHO, and many benefit payments, whilst showing a caring society, are overgenerous and paid to people who really could manage without.

Yet it is the same human nature that claims for ducks and porn videos as avoids paying tax and claims for non-existent children (for a benefits example). The duck owner and video renter go free whilst the (non-)taxpayer and false benefits claimant go down for fraud.

If we had a truly fair society that was based on merit, perhaps we wouldn't have these differences, but human nature rules: and that makes utopia a highly unlikely occurrence.

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Harry Katz

Jan 22, 2010 at 15:30

Fraud increases in times of recession and tax evasion increases when taxes are high. We currently have 'the perfect storm'.

The Westminster goons are unable to do a lot about recession, but perhaps if we had less stealth taxes both problems may be ameliorated somewhat.

Meanwhile look at the Pictet Security Fund. You may as well make some money out of the problem!

As to the figures themselves – whilst I don’t doubt that tax evasion is manifest the proportions and the figures quoted look as if they have come straight from ex private schoolgirl Harridan Harriet’s office. Viva the class war!

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Jo Bell

Jan 22, 2010 at 16:40

What’s more terrifying is the ever growing cases of deceased identify fraud. With over 600,000 people passing away each year, members of the public can take pro-active steps to help reduce the chances of deceased friends and family becoming victims of this terrible crime.

By registering deceased friends and family on www.deceasedpreferenceservice.co.uk, direct mail companies who are responsible mailers and adhere to best industry practices should regularly screen against this database.

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Billy the Fish

Jan 22, 2010 at 17:35

Debt is fraud

Fiat Money is fraud

Fractional Reserve Banking is Fraud

Brown is fraud

Taxation is fraud

and your point is?

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Jan 22, 2010 at 17:40

Is Man in Black from this World? A lot of high level fraud is conducted by the most wealthy, which i suppose is how some aquired their wealth in the first place.

Dame Shirley Porter spent Millions on accountants and lawyers to save her £100million from public sequestration.

Verbal statements from the super rich such as "only the little people pay taxes" suggests the wealthy have avoided their true tax contribution to society for many years. I have no problem with people building a business with their own money and resources; What i do have a problem with is people lecturing others on what they should do (ie MP's etc) and then do exactly the opposite until they are found out.

All say AHHHh

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John Borgars

Jan 22, 2010 at 23:43

This just recycling the HMRC press release about how much more tax they think we should be paying, except that it doesn't include money withheld because a lawyer has spotted a loophole as "fraud". The NFA report admits that its tor other public sector fraud are an extrapolation from a tiny sample and it understates private sector fraud

Tax evasion is both illegal and immoral but I find it surprising that HMRC thinks it as big as tax avoidance, which is legal. Does HMRC think that high earners and their tax advisers are so incompetent? Gordon Brown set up a raft of tax avoidance schemes to benefit the rich (and a few that would help the moderately well-off) so why does HMRC assume almost everyone is sneaking through a hole cut in the fence when the gate is wide open?

For avoidance of doubt: I scrupulously pay my taxes but use Gift Aid and Pension contributions to reduce the amount available to the government to be mis-spent

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