A recent report prepared has revealed that tax fraud makes up 44% of all the fraud reported in the UK.
At £603 million, tax fraud identified in 2012 is nearly twice the level reported in 2010 (£309m). VAT fraud made up over 90% of the reported tax fraud.
The research underpinning the report examined all reported fraud cases of over £50,000. It shows that whilst recent headlines have been occupied by high profile multinationals that are allegedly not paying enough corporation tax, the fraud portion of the country’s VAT gap – the theoretical difference between what the Government expects to collect in VAT and what it actually collects – leaves a huge hole in the treasury’s coffers. Research shows that VAT fraud alone is responsible for 41% of last year’s reported fraud. This compares with a figure for money laundering of 4%.
Clearly, the only figures that we can be sure of those are those relating to frauds that have been discovered and therefore reported. The true level of frauds carried out can only be guessed at. The current UK VAT gap as calculated by the Treasury is approximately £10bn with fraud thought to account for about one third of this figure.
All fraud is serious and impacts on the amount of taxation (whether direct or indirect taxes) payable by the rest of the UK economy, but it is clear that at such massive levels the authorities must surely be aiming a bright spotlight on VAT which will inevitably result in more compliance visits, raids and penalties. Getting VAT wrong, even for innocent traders, cannot be an option.
If you have any concerns about VAT in general, or would like your tax affairs reviewing, please contact our team of experts on 0845 177 5500 or use our online contact form