Frauds against Government rise 43pc as criminals get ambitious

Fraud against the UK Government has risen 43 per cent since the recession as criminals adopt an increasingly businesslike approach.

Following highs of £679m in 2006/07, such fraud dropped to £391m in 2008/09 owing to concentrated action against the theft of VAT, but levels surged to £693m in 2010/11.

In Yorkshire alone fraud against the Government during 2010/11 totalled £15m across two cases involving Her Majesty’s Revenue and Customs, including that of a £12m VAT theft by Jayne Mitchell, a former secretary from Bradford.

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Mitchell was jailed for 10 years last November after getting involved with a gang of fraudsters who imported more than 7,000 new vehicles which they then sold on through a complex web of fake companies with a turnover of over £80m in just two years.

The multi-million pound scam, which was one of the biggest VAT frauds ever uncovered by HMRC, was discovered during a routine VAT check of business records.

Mitchell used the money to buy luxury cars, went on shopping sprees of up to £7,000 at a time on designer clothes, shoes and handbags, as well as buying a £650,000 property at Wistow near Selby, before moving to a £2m mansion in Belgium in 2003.

The other case involved a former tax office worker, Imran Ajaib, who was jailed for sharing insider knowledge with other fraudsters, enabling them to apply for £3m in false tax repayments.

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Ajaib worked at a tax office in Shipley for just six months from February 2006 but within weeks of starting work began accessing information which was passed on to other fraudsters.

The conspiracy involved false claims for tax repayments with bogus addresses being submitted to Companies House and false bank accounts being set up.

Vivien Osborne, forensic director at KPMG in Leeds, said: “Traditionally, criminals have relied upon physical acts, such as robbery; they can now commit a fraud and achieve the same returns for much less risk. This is fuelling the audacity and ambition of professional criminals, driving up the size of a fraud.

“In addition, technology and large-scale processing, such as online or call centres have made large scale frauds easier to accomplish.”

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The KPMG Government Fraud Barometer found that fraud against Government perpetrated by professional criminals reached £527m in 2010/11 – more than three quarters of the total.

While the number of actual cases against professional fraudsters dropped from 33 in 2009/10 to 28 in 2010/11, the average case value has more than doubled over this time from £8m to £18m.

The majority of fraud committed in the last year was tax fraud, with 114 cases coming to court nationally totalling £462m.

New taxes have been accompanied by new frauds with criminals turning their attentions to carbon trading and green tax allowances.