A report by BDO Stoy Hayward has highlighted an increase of some 42% in UK business fraud over the last 12 months, with many believing that this is just the tip of the iceberg.  Its seems that a mixture or potential rewards, reduced chances of being caught and light sentences have tipped the risk reward ratio in favour of the fraudsters - some of whom who make a career out of defrauding customers, tax, etc.

While there are a number of frauds popular with the criminals, two of the main ones are :-

Carousel Fraud

This type of fraud is becoming more and more popular with businesses around Europe, and the changes to the European market structure have highlighted the potential rewards.  It is now easy to move goods around Europe and take advantage of the tax benefits, whereby no VAT is charged.

Many companies have been found to be billing none existing sales to customers, and then claiming back the VAT from the tax authorities.  With the authorities under the impression that the goods had been sold, many companies have been caught out reselling the goods in other areas of Europe, and reclaiming VAT on yet more none existent sales.  The potential rewards from these frauds are enormous, and detection rates are very low with the authorities stretched to the limit.

Business To Business Fraud

There have been numerous examples of business to business fraud, whether this is the sale of none existing goods, fraudulent banking transactions or employee fraud.  The problem with business frauds is that those who suffer do not want the rest of the industry to know their problems, they need to keep their reputations intact.   This has led to prosecution rates falling as low as 15%, with many companies not willing to take the matter to court, and only really interested in getting back the funds involved in the fraud.

The internet has opened up many markets for fraudsters, with spyware and email fraud becoming more and more common.  It is proving near impossible to trace many of these online fraudsters who can move there bases around the globe at the touch of a button.  This is one major downside to the increasing use of the internet.