30 January 2004
The government is the major victim of fraud in the UK, new figures reveal.
Big-scale VAT scams contributed to tricking the government out of more than £181m in 2003, consultancy KPMG claims in its annual fraud barometer survey.
Fraud against the government accounted for almost half of the total amount committed in the UK last year – £374m.
However, the scale could be even greater, as only one in ten cases is detected. KPMG's barometer counts only frauds that have led to prosecution and total more than £100,000.
The £181m figure was fuelled by 'carousel' or 'missing trader' frauds. In their simplest form, these involve somebody importing goods from a zero-rated VAT source, selling the goods with VAT included and then disappearing without passing the VAT on to Customs & Excise.
Such frauds are usually committed by professional criminal gangs.
But this year's figure represents a kind of victory for Customs & Excise. In 2002 more than £300m of carousel frauds were detected.
'This is good news for the government and specifically Customs & Excise,' said David Alexander, a fraud investigation partner with KPMG Forensic.
Four years ago, the government set up a task force to clamp down on VAT crimes and Customs said that this type of fraud was now in decline.