The value of fraud committed in the South West has more than trebled over the past year to go above £45m for the first time, new figures show.
The increase is in marked contrast to the picture for the UK as a whole, with the value of total reported fraud in 2012 falling by a third to £1.37bn.
And with most fraud going unreported, experts believe the true figure is much higher.
Some 46 cases of fraud worth more than £50,000 were reported in the South West last year, among them an elaborate fraud worth nearly £27m masterminded by a 21-year-old computer hacker who stole and sold financial data, a £4m scam by a group of 12 people using fake pay slips during a mortgage fraud racket, and two men who earned up to £350,000 from illegally clamping vehicles across the region.
The substantial rise in the crime is revealed today by accountancy and business advisory firm BDO in its 2012 Fraud Track research, which examines all reported fraud over £50,000. BDO covers the South West from its office in Bristol.
BDO forensic partner Sat Plaha, pictured, said: “There is still real concern that the vast majority of both public and private sector fraud is not reported, with business owners not wanting to involve the police in such matters unless absolutely necessary. With that in mind, the true cost to the region is likely to be much higher than £46m.”
The BDO research shows that VAT fraud alone accounts for 41% of the total UK figure. The current UK VAT gap, the theoretical difference between what the Government expects to collect in sales tax and what it actually collects, is around £10bn with fraud accounting for approximately a third of this figure.
Mr Plaha added: “The fact that tax fraud, and VAT fraud in particular, accounts for such a high proportion of overall fraud, is evidence that this continues to be a serious issue for HMRC, especially given that full recovery is not always possible.”
In real terms, if a third of the UK VAT gap is due to fraud, that equates to £3.3bn missing from the public purse every year – equivalent to at least 1p off the effective rate of tax for every UK taxpayer. £3.3bn would pay for the winter fuel allowance, free TV licences and compensating pensioners on the pensions credit (£1.4bn) and still leave enough to build 17 new hospitals (£1.9bn/£113m).
Having dominated fraud figures in the last few years the finance and insurance sector appears to have made substantial strides towards combating fraud, reporting its lowest level in five years at almost £500m in 2012. Topping the tables as the industry most susceptible to fraudulent activity is public administration (£615m).
