RegulationLegalFraud hits highest level for 12 years

Fraud hits highest level for 12 years

Volume of fraud hits highest level for 12 years, but average vale of cases slashed by a third, report finds

Fraud hits highest level for 12 years

INSTANCES of fraud hit their highest level for 12 years in 2014 as a result of a large increase in “unsophisticated fraudulent activity”, a report by accountants BDO has found.

According to BDO’s FraudTrack report, which examines all reported fraud cases over £50,000 in the UK found that the total number of reported cases rose to a record 546 in 2014 from 525 in 2013.

At the same time, the total value of fraud fell 31% to £720m and the average value of fraud fell by 34% as larger complex cases were increasingly dealt with outside the judicial system.

The report’s author, Kaley Crossthwaite, partner and head of fraud at BDO, said 2014 was characterised by a large increase in unsophisticated fraudulent activity which was of low value but high in volume.

“One of the reasons why we have seen the lowest total value of fraud since 2003 is due to a growing trend for high value complex fraud to be dealt with outside of the judicial system and out of the public eye,” she said. “Companies are increasingly assessing the reputational cost to their brands of a public case against the cost of pursuing the perpetrators of the fraud through the courts.”

Many of the cases dealt with publicly in 2014 involved “old fashioned” manipulation of victims and authorities, and relatively low-tech fraud schemes. Submitting false invoices whether to get cash, support insurance claims or VAT refunds are all simple and make up a large number of cases, often in conjunction with other types of fraud. 

Separately, insolvency trade body R3 has called for criminal bankruptcy to be re-introduced to help combat fraud. Insolvency practitioners say that Criminal Bankruptcy Orders would allow the retrieval of funds from defendants more effectively than is possible under the current system of confiscation or criminal orders.

Giles Frampton, president of R3, said: “Insolvency practitioners already have significant powers to investigate fraud and find redress for victims. At the moment, these powers are only used in a limited number of situations: increasing the opportunities to use insolvency practitioners’ powers would help bring fraudsters to justice and ensure victims are properly compensated.”

Related Articles

HMRC invests in Fraud Investigation Service ahead of Criminal Finances Act

HMRC HMRC invests in Fraud Investigation Service ahead of Criminal Finances Act

3m Alia Shoaib, Reporter
Accountant jailed for £25,000 fraud

Legal Accountant jailed for £25,000 fraud

1y Richard Crump, Writer
Advisers arrested in suspected £132m tax fraud investigation

Legal Advisers arrested in suspected £132m tax fraud investigation

1y Richard Crump, Writer
CIPFA announces anti-corruption qualification

Accounting Standards CIPFA announces anti-corruption qualification

1y Calum Fuller, Reporter
Harrow accountant convicted of Gift Aid fraud

Administration Harrow accountant convicted of Gift Aid fraud

1y Richard Crump, Writer
BDO pinches KPMG leader for new legal role

Accounting Firms BDO pinches KPMG leader for new legal role

1y Fraser Simpson, Reporter
Google’s Paris HQ raided in tax avoidance probe

Administration Google’s Paris HQ raided in tax avoidance probe

1y Fraser Simpson, Reporter
Gift Aid fraud accountant jailed for six years

Corporate Tax Gift Aid fraud accountant jailed for six years

1y Fraser Simpson, Reporter