Tax fraud reaches 5-year high in Britain

LONDON - Tax fraud in Britain has risen to a new high since 2007 and is double the levels in 2010, a report of accountancy and business advisory firm BDO LLP revealed on Monday.

The BDO FraudTrack study, which examines all reported fraud cases over 50,000 pounds ($81,500), found that tax fraud accounts for 44 percent of all fraud reported in Britain.

Tax fraud cost the country 603 million pounds in 2012, compared with 274 million pounds in 2009 and 309 million pounds in 2010.

"Politicians and the public at large are presently pointing their finger at various multinationals for allegedly not paying the correct amount of corporation tax," said Simon Bevan, author of the report.

"However, our latest survey of UK fraud shows that, in reality, it is the fraud element of UK's VAT gap - the theoretical difference between what the government expects to collect in sales tax and what it actually collects - that is the bigger drain on the public purse," he said.

The report found that VAT fraud alone accounted for 41 percent of the total fraud figure in Britain.

Bevan believed that many serious VAT fraud cases were "committed by professional criminals, rather than reckless ad hoc amateurs".

However, total fraud declined to 1.37 billion pounds in 2012 from 2.1 billion pounds in 2011, according to the report.

"The overall drop in reported fraud between 2011 and 2012 has to be treated with some scepticism," Bevan said.

"We know through our own investigations that in the vast majority of cases, the police do not have the resources necessary to investigate a number of large complex frauds in parallel," he said.