Fraud in Scotland leaps 88 per cent in a year, to £30.4m

Fraud in Scotland leaps 88 per cent in a year, to £30.4m

Sat Plaha

Research carried out as part of accountancy firm BDO LLP’s annual FraudTrack report shows that Scotland ranked as the fourth most defrauded region in the UK by value as fraud rose by 88 per cent from £16.2m in 2017 to £30.4m in 2018.

Accountants and business advisers BDO discovered that while the number of cases reported fell by 14 per cent to 43 (down from 50 cases in 2017), the rise in the cost of fraud in the region was largely due to fraud in the public administration sector which rose by 565.3 per cent in value up from £2.9m in 2017 to £19.5m in 2018.

The costliest reported fraud that took place in Scotland in 2018 was part of a probe by HM Revenue and Customs into a suspected £12 million VAT fraud. In 2018, the region recorded £14.9m of highly organised tax fraud cases with employee fraud and third party fraud also rising in value, up 62.8 per cent and 136.5 per cent respectively.

The total value of fraud UK-wide more than halved in 2018. Following a record 15-year high in 2017, reported fraud fell from £2.1bn to £746.3m. This is the lowest level of fraud since 2014 when the value fell to £720.3m, however experts at BDO say the true cost of fraud to the UK could be as high as £37.5bn.

Sat Plaha, partner and national head of regional forensic services at BDO, said: “The increase in sophisticated high value fraud in Scotland is a concerning trend. This is all the more alarming when our experience suggests that as few as one in 50 cases of fraud in the UK are likely to be reported so the figures only shine a spotlight on the visible part of a much wider problem. It is essential that businesses and government alike continue to deploy a proactive risk-based approach to protect themselves from harm’s way. Education and retraining of the workforce in how to detect fraud is vital.” 

While London and the South East remains the biggest hotspot for fraud in 2018, accounting for over 60 per cent of all recorded fraud in the UK, Scotland proved to be the fourth biggest hotspot for fraud by both value and volume. Notably the 43 cases of reported fraud in the region represented over 8 per cent of all UK fraud by volume while the £30.4m of fraud by value represented 4 per cent of all fraud.

Yorkshire took over from the West Midlands in 2018 as the largest hotspot for fraudsters outside London, with a 51.2 per cent increase to £52m. This large increase is due in part to a significant jump in the value of third-party fraud (315.6 per cent) in Yorkshire with the average value of fraud increasing by 51.2 per cent to £1.3m up from £860k.

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