FT.com / Companies / Financial Services - UK fraud losses rise to a high of £2.1bn.
BDO have monitored recorded fraud loss since 2003. It's reached a new high, according to them, of £2.1bn.
As they say:
The statistics significantly under-report actual losses to fraud because they include only those cases publicly reported to authorities. More than 90 per cent of the losses investigated by BDO and other forensic accounting firms are never prosecuted. Many companies prefer to handle problems such as employee theft, accounting misdeeds and kickback payments privately or via civil litigation.
Management fraud, in which senior executives issue misleading financial statements, was the single largest category of fraud, accounting for 24 per cent of total losses.
As some of us have said, chaps don't like prosecuting chaps for msi-stating accounts. That's just not what you do.
But the chaps at BDO are also guilty of turning a blind eye to fraud. Tax evasion is fraud. My current estimate of annual tax evasion in the UK is £70 billion per annum.
I can't help but ask why BDO appear to ignore every single penny of it when calculating their fraud stats? Is de-frauding the state somehow acceptable and not worthy of the name but defrauding business is serious?
I'd like to know their reasoning.
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Richard:
Don’t you find it slightly strange that your estimate of tax fraud/evasion is 35x higher than BDO’s estimate of coporate fraud?
Is the state sauch an easy fraud target? (in which case one has to ask whether it is conspiring to create its own problems)
Or could it be that your estimate of tax evasion is, perhaps, maybe, “slightly” inflated?
a) You ignore BDO’s underestimating
b) The state is too easy a target – I agree – HMRC has been starved of resources
c) I estimate 13.7% of all tax revenues are lost – the official figure for VAT losses
If you lose 13.7% of tax on the top line you lose all the rest as well
No chance of an underestimate
But BDO are miles and miles out
Edouard
The state may be an easy target, but probably more importantly, it is the biggest target, to state the bleedin’ obvious. If you ignore the largest possible subject of fraud, your results are going to be way out.
It would be like producing alcohol consumption statistics and ignoring beer!
If BDO underestimated the lost tax revenues by five, your figures are still way out of the ball park. Do you think the real answer may lie somewhere in between your and BDO’s figures?
John
Not at all
It is a recorded fact that 13.7% of VAT on average has been lost over the last 7 years
What is wrong with extrapolating that across all taxes?
Richard