With less than two weeks to go before the Chancellor delivers his first full Budget speech, KPMG says now’s the time to do more for small to medium-sized businesses.

Tom McGinness, head of middle market tax at KPMG in the UK, said: “With economic conditions getting tougher, now is the time for the Treasury to act in helping ensure the UK is a great place to do business. In the run-up to the budget, we would urge the Chancellor to focus on simplification and certainty.”

Simplification
The proliferation of tax law is a major issue for all businesses in the UK but it is one which affects smaller companies disproportionately hard for two main reasons. Tom McGinness explained why:

“The first issue is the ‘law of unintended consequences’ - legislation designed to tackle a particular issue can often end up affecting lots of other areas. And the second is that tax law tends to affect all companies in the same way regardless of size but the larger companies usually have more in-house expertise to help them through the minefield of legislation.”

Certainty
The lack of certainty around tax is the third issue KPMG would like to see addressed in the budget. Tom McGinness said:

“Recent announcements and subsequent amendments to proposals around the capital gains tax rules and the tax regulations surrounding non-UK domiciled residents, have received an extremely negative response from business. And we still don’t have the final legislation. This leaves businesses operating in the dark - a position they find extremely uncomfortable, and also leaves them feeling uneasy about what future changes might be introduced without prior consultation.. And, while these are fairly extreme examples, they are not isolated incidents. It’s important for business to know where it stands and to be confident that a decision based on today’s environment will still make sense tomorrow. If the rules keep changing then it’s almost impossible to keep up.”

There is considerable uncertainty around the shape of likely proposals to reform the way in which British companies’ foreign profits are taxed by the UK authorities. Mooted proposals issued in a discussion document last June have proved to be one of the most talked about developments in the corporate tax world in recent memory. The authorities have held a series of meetings with representative bodies, advisers and individual taxpayers. They are still inviting real examples of where proposals could cause issues. There could well be an update in the budget. We would expect a further consultation document to be published on budget day or shortly thereafter.

A “Green Budget”. Back in December the Chancellor declared that it is sustainability that will be at the heart of the next budget. Areas likely to see changes are around employment taxes, company cars and travel.

A change to the way that the Authorised Mileage Allowance Payment (AMAP) scheme operates would not be a surprise. This is the scheme which allows employees to claim a tax free amount (currently 40p up to 10,000 business miles in a year, and 25p thereafter) when using their own car for business mileage. The Government have been consulting on this area for sometime and in the 2007 Budget said:

“The Government will consider the case for changing the structure of AMAPs to align the tax and NICs treatment and ensure that the rates and thresholds are set at an appropriate level to promote environmentally friendly business travel.”

It’s not clear what changes the Government might make in this area, but a higher rate for lower mileage, combined with a lower rate for higher mileage has been suggested.

Looking at travel more widely, KPMG notes that there is currently no income tax or NIC payable where an employer offers:

* free or subsidised work buses

* subsidies to public bus services

* cycles and safety equipment made available for employees

* workplace parking for cycles and motorcycles

Tom McGinness said: “We would like to see the green transport options broadened to include all forms of public transport, so that an employer could make using public transport at least as attractive as driving to work.”

According to KPMG, the Chancellor could take the opportunity in this budget to make working from home more tax-efficient. Currently employees can be paid up to ??104 per year towards the additional household costs incurred by working at home without supporting evidence of the costs. Any additional payment requires that evidence is obtained and retained. The additional administrative burden discourages both employer and employees from being willing to claim more, but the ??104 payment is not significant enough to encourage home working.

By increasing the level of tax free payments available without additional evidence, the government could make it easier to encourage employees to choose to work from home.

Tom McGinness concluded:
“Where green issues are concerned, there are currently more sticks than carrots. The more people feel that they are already paying for climate change through a multitude of taxes, the less incentive they will have to be proactive. So for each increase in tax on a bad behaviour that the budget includes, we would like to an equal reduction for good behaviour.”

KPMG says that over 1,700 London-New York flights’ worth of CO2 could be saved if employees switched back to company cars.

The UK could save annual CO2 emissions equivalent of just over 1,700 Boeing 747/8 flights from London to New York - if all employees who have opted out of company car schemes chose to take advantage of ‘green’ tax breaks and opt back into their employer’s schemes.

According to KPMG’s Company Car team, since 1999 there has been a decline in the number of company cars, with HMRC figures indicating 400,000 employees having opted out in preference of purchasing their own vehicles. KPMG research** suggests that 52 per cent of employees who opt for cash instead of a company car use the money to purchase a second hand car, with emissions estimated at 30-40 plus grams per kilometre higher than the average company car driven by their colleagues.

If all 400,000 employees that have opted out opted back in, assuming they currently emit the national private car average of 191g/km**, driving a typical distance of 18,000** miles per annum and they drop to the average company car with emissions of 165g** on the same mileage the UK would save total annual CO2 emissions of 301,000 metric tonnes the equivalent to just over 1,700 Boeing 747/8 flights from London to New York.

Harvey Perkins, director within KPMG’s Company Car team commented:

“Changes made by the Government in 2002 to the company car tax rules were received with mixed reviews. For a minority driving relatively low business mileages in relatively high emissions vehicles, the changes had a negative financial impact and a number of people chose to opt out of the company car regime and buy their own cars instead. However, there is no doubt that the effect of the Government’s foresighted approach to use these rules to help employees make the right environmental choices has been to drive down CO2 emissions in company cars.

“Recently we have been seeing a change in mood with the number of company cars beginning to grow again. This seems to be driven by employees being more aware of the advantages of company cars both to the environment, and by extension their own pockets and, to some extent, employers’ concerns over the potential health and safety implications of their staff using privately owned vehicles for work purposes.”

A move towards consumers demanding greener vehicles is forecast to continue according to the 2008 annual global automotive survey by KPMG LLP in which senior global auto executives reported increased demand for vehicles using alternative fuel sources: 65 percent of respondents said this was important or extremely important to consumers, a significant increase on 53 percent in 2007.

Further changes to company car tax rules will come into force from April this year, and will allow for a much lower tax and national insurance charge in respect of vehicles that emit 120 grams of CO2 per kilometre or less. These ultra low emission vehicles allow employees to benefit from the lowest tax charges on company cars in a generation.

According to Harvey Perkins employers are looking to respond by improving their company car options. He said:

“Employers are keen to ensure their schemes offer employees the best options by featuring cars in the lowest emissions bracket. As manufacturers continue to strive towards delivering viable environmentally friendly alternatives, the financial and environmental benefits could be significant.”

The Australia-Japan tax treaty signed by Australian Foreign Minister, Stephen Smith, in Japan yesterday is a long overdue overhaul that will be a boon for businesses on both sides, according to KPMG Australia Tax partner, Rick Asquini.

“As Japan is a major source of foreign investment in Australia, the improvements in this new agreement around withholding taxes on dividends, interest and royalties will be a very positive step towards maintaining and attracting further investment. We will see more Japanese yen flow into Australia.

“Until now we’ve been operating under an agreement established nearly 40 years ago, business has changed dramatically over this time and this new treaty reflects the strength of the trading relationship.

“I would strongly encourage all Australian companies operating in Japan and Japanese companies here to review how they are financing their operations and assess their dividend and royalty arrangements immediately in light of these changes,” he said.

Mr Asquini said the energy and natural resources sector may face a shake up in light of the short timeframe in which Japanese companies may engage in the exploration of natural resources tax-free.

KPMG’s Transfer Pricing Partner, Anthony Seve said that Japanese companies in Australia would be relieved by the newly established time limit on transfer pricing reviews.

“In the past, there was no time limit on these reviews and that meant there was a high degree of uncertainty and administrative burden for many companies. Now that uncertainty has been removed, it will help Japanese companies to better manage their transfer pricing risk in a more practical and efficient manner,” said Mr Seve.

In addition, through the interpretative notes of the treaty, a clear intention is stated as to the application of OECD principles and methods to resolve Australia/Japan transfer pricing cases.

“It is hoped that this affirmation of approach between Australia and Japan will assist in resolving some difficult transfer pricing cases that are currently under examination,” said Mr Seve.

The following experts from PricewaterhouseCoopers LLP are available to offer analysis and comment in the lead up to, and on the day of, the Chancellor of the Exchequer’s 2008 Budget speech due to take place at 12.30pm on Wednesday 12 March. Please contact the experts direct or call the PricewaterhouseCoopers Budget media hotline on 020 7804 6924.

General overview: Will the Chancellor set out his vision for the tax system in his first full Budget?
John Whiting: T: 020 7804 4422, M: 07710 027595
Richard Collier-Keywood: T: 020 7213 3997, M: 07802 200149

The economy and public finances: How will the Chancellor respond to slowing economic growth and rising public borrowing?
John Hawksworth: T: 020 7213 1650

General corporate tax issues: Will the Chancellor go further than just cutting the rate of corporation tax to ensure the UK remains internationally fiscally competitive?
Mark Schofield: T: 020 7212 2527, M: 07802 757741

EU corporate tax issues: Taxation of foreign profits, will the Chancellor make an announcement?
Peter Cussons: T: 020 7804 5260, M: 07801 743376

Tax and the environment: Will the Chancellor put a long term structure in place for the direction of tax policy and the environment?
John Manning: T: 020 7212 8894, M: 07711 063719
Nick McChesney: T: 020 7804 2106, M: 07771 701667

HM Revenue & Customs (HMRC) powers: Current consultations on HMRC powers; will the Chancellor make any further announcements?
Stephen Camm: T: 020 721 23142, M: 07710 737703

Employment taxes: Will there be any plans to extend existing tax and NIC exemptions to support changes in environmental and social needs?
Matthew Hunnybun: T: 020 7212 6927, M: 07710 611648
Gary Hull: T: 020 7212 2712, M: 07710 397763

Entrepreneurs/private companies: Will we see the promised package for enterprise? Will there be a fundamental review of the tax system for small business?
Kevin Nicholson: T: 01509 604232, M: 07703 130953

Personal taxes: How to cope with the CGT and income tax changes - are there any more to come?
Leonie Kerswill: T: 020 7213 8588, M: 07714 226697
Clive Mackintosh: T: 020 7804 5614, M: 07710 371362

Wealth advisory: Will the Chancellor announce plans to encourage saving rather than spending?
Phil Wood: T: 0121 265 5766, M: 07711 771362

Residence and domicile: What impact could the new rules have?
George Yeandle: T: 020 7212 4638, M: 07710 385269
Leonie Kerswill: T: 020 7213 8588, M: 07714 226697

Pensions: Will there be news on rules around sponsor access, which will encourage better scheme funding with less concern of trapped surpluses?
Raj Mody: T: 020 7804 0953, M: 07974 969320
Marc Hommel: T: 020 7804 6936, M: 07801 767373

Deloitte have created a series of ‘TV’ channels that are viewable from their website.

They cover areas such as International Women’s Day, Supporting Local Communities, In The Dark II Survey, This is Deloitte, The Strategy Paradox (book launch) and Best Brand for Tax (ITR survey ranked them No 1).

I think this is a cool idea they have had and I might do something similar for eTaxJobs. I just need to hire someone sufficiently photogenic before we start rolling the cameras !

To view the TV page, please click here

International Tax Talk with Ernst &Young’s Foreign Tax Desks:
Date: Tuesday, February 12, 2008
Time: 1:00 p.m. - 2:15 ET New York
Registration: Register for this Webcast at
http://webcast.ey.com/thoughtcenter/default.aspx?pid=937

Many multinational corporations find it a challenge to keep up with frequent changes in the global tax legislative and regulatory environment. To help address this challenge, Ernst & Young LLP cordially invites you to join this Thought Center Webcast. Each installment of this quarterly series provides you with information on major tax law changes in the countries and jurisdictions covered by their U.S.-based Foreign Tax Desks.

In this installment, they will discuss:

-Challenges and opportunities in Italian tax reform
-Important developments in India
-Anti-base erosion rules
-Branch transactions and section 987

During this interactive webcast, you will have the opportunity to ask questions through the website and the Foreign Desks will answer as many of your questions as time permits.

This program will be of interest to VPs Tax, Directors of Tax/International Tax, International Tax Managers and Tax Accountants looking for the latest practical information and planning ideas to support their global business initiatives.

Featured Panelists:
Sanjay Chakrabarti, Ernst & Young LLP, Indian Tax Desk
David Golden, Ernst & Young LLP, International Tax Services, Capital Markets
Andrea Lovisatti, Ernst & Young LLP, Italian Tax Desk
Sebastiano Marinozzi, Ernst & Young LLP, Italian Tax Desk
Roderik Rademakers, Ernst & Young LLP, Dutch Tax Desk

Moderator
Marco Groen, Ernst & Young LLP, Eastern European Business Group

You can register for any webcast in three easy steps:

1. Go to the Thought Center Webcast site:
http://www.ey.com/webcast and click “Upcoming Webcasts” on the right side of the page to select the program for which you would like to register.
2. Click the “Register” button, enter your e-mail address, and complete the simple registration form.
3. After you have completed the registration form, follow the instructions to test your system for the webcast technology.

Singapore ranks second, after the Maldives for the ease of paying taxes, says a recent report launched by the World Bank, IFC, and PricewaterhouseCoopers (PwC). Paying Taxes 2008, the second report in an annual series on tax systems, covers 178 countries worldwide. The report concludes that there is a win-win opportunity for governments and firms if governments simplify tax systems, ease the compliance cost on business, and reduce tax rates.

Singapore performed favourably in the indicators measured, garnering its leading position. The poll reports that on average, a company here takes only 49 hours per year to comply with tax obligations. With only 5 tax payments that companies are required to pay in the city state, Singapore is ranked within the top 10 in terms of fewest number of tax payments.

“Singapore has a strong reputation for the ease of conducting business. An effective tax administration, together with a streamlined, efficient tax collection process, is fundamental to the ability to do business in a country. Given that an inefficient tax system disproportionately affect smaller businesses, it is critical to a country’s development to continue to streamline processes or risk being left behind. Companies operating in Singapore benefit from an efficient tax system and low rates of tax and are therefore better able to concentrate on their core business competencies,” says Paula Eastwood, Head of Corporate Tax, PricewaterhouseCoopers Singapore.

Tax reforms that make it easier for firms to pay taxes can increase government revenues by broadening the tax base. This year, 31 economies improved their business tax systems, and 65 have done so over the past three years. Bulgaria was the top reformer, and Turkey was runner-up. While reducing corporate income tax was the most popular reform, implemented in 27 economies worldwide, many countries have reduced the compliance burden by simplifying or eliminating other business taxes. Countries in Eastern Europe and Central Asia had the most reforms in 2006 and 2007, but tax rates remain highest there and in Africa. The compliance burden is highest in Latin America and in Eastern Europe and Central Asia.

“Reducing the tax burden was the second most popular reform of the business regulatory environment this year. Despite previous reluctance to reduce tax burdens for fear of cutting government revenues, some governments that have implemented tax reform have reaped the benefit of higher investment and economic growth,” said Rita Ramalho, coauthor of the report and tax specialist with the World Bank/IFC Doing Business project. “Economies with a lower business tax burden also have more new firms entering the market.”

The case of Egypt is instructive. Two years ago it implemented major tax reforms, which included reducing the corporate income tax rate by almost half. This has increased the government’s tax base and revenues.

This year the top 10 economies for ease of paying taxes are, in order, Maldives, Singapore, Hong Kong, United Arab Emirates, Oman, Ireland, Saudi Arabia, Kuwait, New Zealand, and Kiribati. The 10 economies where it is most difficult are, from 169 to 178, Panama, Jamaica, Mauritania, Bolivia, the Gambia, Venezuela, the Central African Republic, the Republic of Congo, Ukraine, and Belarus.

Complying with administrative tax requirements remains a real burden for business. Globally, on average, a company spends almost two months a year complying with tax regulations 15 days for corporate income taxes, 21 for labor taxes and contributions, and 21 for consumption taxes. However, there are wide variations between countries. For example, it takes 105 days to comply with consumption taxes in Azerbaijan but only one day in Switzerland.

The study allows direct comparison of tax systems from around the world. It shows how businesses are affected not only by tax rates, but also by the procedural burden of compliance. The report focuses on the number of tax payments made, the time it takes to comply, and the cost of taxes, which is measured by the total tax rate. The total tax rate covers five types of taxes that firms pay: profit, social, property, turnover, and other taxes, such as municipal fees and fuel taxes. The steps, time, and cost indicators are used to determine the overall ease of paying taxes.

Compliance issues can significantly affect the overall ranking, either counteracting the benefit of a low tax rate or mitigating the impact of a high tax rates. Scandinavian countries, while known for high taxes, do well on the ease of paying taxes because of a low compliance burden.

The report calls on businesses to play a strategic part in reform. Ms Eastwood added: “Businesses could be more upfront in revealing their total tax contributions, to help governments assess their real economic footprint. More and better information about the taxes paid and the cost of compliance is essential to understanding how tax systems affect businesses. It is clear that governments need to look across all taxes when considering reform. Greater transparency helps focus public debate on where reform efforts are most effective. Ultimately, this will give business more confidence and willingness to invest.”

In addition, the report shows how widely tax systems vary in Asia. Singapore (2nd) and Hong Kong (3rd) are among the top 10 countries cited for ease of paying taxes. A snapshot of other Asian economies’ performance includes: Brunei (28th), Cambodia (21st), China (168th), India (165th), Indonesia (110th), Japan (105th), Korea (106th), Lao (114th), Malaysia (56th), Philippines (126th), Taiwan (91st), Thailand (89th) and Vietnam (128th).

The findings demonstrate that when considering reform, governments need to look at all taxes paid by companies. Corporate income tax is only a part of the story, accounting for only 37 percent of the total tax rate, 26 percent of the number of hours spent on tax compliance, and 12 percent of the number of tax payments. Labor taxes and contributions add significantly to the tax cost in some countries and also to the compliance obligations.

“An inquiry into the amount of tax paid by the corporate sector must look beyond corporate income tax and take account of all business-related taxes borne and collected, in other words, the total tax contribution.

This is one of the findings of in-depth research conducted at the end of 2007 by PricewaterhouseCoopers (PwC) into how much tax large South African companies in fact pay, and how much tax (such as PAYE and VAT) they collect and remit to the South African Revenue Service (SARS). This is the first such study in South Africa, and the results will be of great interest to stakeholders such as National Treasury, SARS, the corporate sector, institutional investors, trade unions and others.

“The PwC study has corroborated what similar PwC studies of foreign countries have shown,” explains Charles de Wet, the PwC director responsible for the Total Tax Contribution project.

Key findings arising from the survey
“The factual data arising from the survey is being put into the public domain by PwC to facilitate an informed debate on the present and future shape of South Africa’s tax system as it affects large companies,” says De Wet. Key survey findings include:
In South Africa, the total number of taxes levied (and either borne by the companies or collected by them) is currently 21 after the abolition of Regional Services Council levies and Retirement Funds tax. Prior to 31 March 2007, this number was 23, which included 21 national taxes and two local taxes. By way of comparison, similar studies in the United Kingdom identified only 22 business taxes, while 56 taxes were identified in a study in Australia and 31 in the Netherlands.
In assessing the tax burden of the corporate sector, it is necessary to look further than corporate income tax and to take account of all business taxes borne by companies, and hence the aggregate of all taxes paid by companies, as well as the burden of collecting taxes on behalf of the fiscus.
The survey results corroborate the importance of large South African companies to government finances by way of taxes borne and collected. The 50 companies surveyed bore in aggregate R50.4 billion in taxes and collected a further R52 billion on behalf of government (national and local) in 2007. This represented 10.1 percent of government receipts in respect of taxes borne. In addition, 27.3 percent of the total corporate tax in 2007 and 31.9 percent of Secondary Tax on Companies (STC) was paid by these 50 companies.
On average, the companies surveyed reported paying 8.7 different business-related taxes.
An important issue highlighted by the PwC study is the importance to SARS (and to the corporate sector) of taxes collected by companies, though not borne by them, and paid over to SARS. These include PAYE, VAT and excise duties. On average the companies surveyed reported collecting 3.2 different taxes and paying them over to SARS.

Support for the survey
Michael Spicer, CEO of Business Leadership, an organisation whose members include South Africa’s largest corporations says, “Taxation and specifically corporate taxation is always an important and lively part of the economic debate between business, government and other stakeholders in market democracies. It is vital that such debate be underpinned by strong empirical research and evidence. Until this timely PwC report, such evidence has been lacking in South Africa and the quality of the debate on corporate taxation on all sides has suffered accordingly. Business Leadership is a body comprising the 65 largest South African and multinational companies invested in South Africa, from whose ranks the majority of respondents were drawn, and is delighted to have participated in this endeavour.”

De Wet confirmed that the purpose of undertaking this total tax contribution study was not to act as a lobby group for the corporate sector, nor to advocate specific tax reforms, but simply to elicit factual data to place in the public domain as the basis for an informed debate between all stakeholders.

Background
Around the world, large corporations are a vital source of revenue for the national tax authorities. But how much tax do these corporations really pay? Is tax taking an inordinately large slice of their profits? Are governments relentlessly increasing the number of taxes and increasing their overall tax take? Is big business being crushed by the expense of complying with tax legislation?

There is also a perception that large companies do not pay as much tax as they should. Again, such perceptions are seldom supported by empirical data and are frequently based on generalisations, speculation and innuendo.

In times past, aggressive tax avoidance by the corporate sector was regarded as within the rules of the game. In more recent years, the payment by a corporation of the tax properly due by it is increasingly being regarded as part of its corporate social responsibility, and as a corporate governance issue.

This report from Ernst & Young covers 850 MNEs in 24 countries, and summarizes their transfer pricing practices, perceptions, and audit experiences, and provides insight into how they are dealing with the economic, regulatory, and fiscal changes taking place around the world.Since 1995, Ernst & Young has surveyed MNEs on international tax matters. The scope of our biennial transfer pricing research reflects the growing number of countries that devote attention to transfer pricing through increased enforcement and regulatory activities, as well as the diversity of transfer pricing issues facing MNEs.

Download the “2007-2008 Global Transfer Pricing Survey: Global Transfer Pricing Trends, Practices and Analyses” (pdf, 1.2mb) for findings from each country, compared with regional and global results. Also read analysis of issues including documentation and controversy risk management practices, convergence of customs and transfer pricing, the impact of financial reporting requirements, and audit experiences, as well as insight into industry sectors.

Key findings from the report include:

• Forty percent of all respondents identified transfer pricing as their most important tax issue
• Over half (52%) of all respondents have undergone a transfer pricing examination since 2003, with 27% resulting in adjustments by tax authorities
• Eighty-seven percent of all respondents consider transfer pricing a risk issue in relation to managing financial statement risk
• Sixty-five percent of respondents from parent MNEs believe transfer pricing documentation is more important today than two years ago. But only one-third of MNEs prepare transfer pricing documentation on a concurrent, globally coordinated basis.

Britain’s fraud problem shows no sign of abating, with over GBP1bn of fraud coming to court in 2007 according to KPMG Forensic’s Fraud Barometer - the highest value since 1995 and the second highest in the 20 year history of the Barometer. The number of cases coming to court fell to 197 from 277 in 2006, but this remains a higher number than seen in any year prior to 2005.

With fears that the credit crunch will lead to a period of protracted economic slowdown, there is the potential that personal and corporate pressures may fuel fraudulent behaviour making the situation worse in 2008 rather than better, KPMG Forensic warns.

Hitesh Patel, partner at KPMG Forensic, said: “Levels of fraud continue to remain disturbingly high. Organised gangs have been more active than ever, with a proliferation in VAT frauds, ID thefts and other forms of white collar crime, to the tune of a huge GBP889m or nearly 90 percent of fraud by value. The sophistication of organised fraud in the UK is certainly extremely concerning. More fraud cases have been coming to court in recent years than previously, but one fears that this is just the tip of the iceberg. 2007 saw a respite in prosecutions for frauds against banks and other corporates, but now that the economy looks set to slow, we could see more people attempting frauds to ease their financial burdens. As companies tighten their belts in the harsher conditions and take a closer look at their operations and related expenditure, it is highly possible that a greater number of frauds may be detected.”

Gangs aggressively targeting the Government
Organised criminals accounted for nearly 90 percent of fraud by value in 2007 (GBP889m), with the Government agencies having been the primary target (GBP833m). This represents an enormous jump from 2006, when professional gangs accounted for GBP221m of fraud. Once again last year, carousel fraud on items such as mobile phones represented a substantial proportion of the value of organised fraud. It remains to be seen whether the reverse charging mechanism introduced by the Government last summer for domestic supplies of mobile phones and computer chips, combined with the continued success of their operational efforts, will have a material impact on the scale of carousel fraud cases, or whether gangs will simply move their focus to other goods.

ID theft continues to have an impact
Gangs have also aggressively exploited ID theft to perpetrate scams, making false benefit or tax credit claims. One husband and wife team claimed benefits for no fewer than eight adults and forty six children at a one bed flat in London, defrauding the public purse of over GBP1.1m. Other gangs targeted the transport system, organising large scale frauds on fake bus and tube passes.

Some criminal groups have become creative and brazen in the manner in which they steal and utilise ID’s. One gang stole homeowners’ identities by posing as would-be buyers, collecting enough details on the house to apply for title deeds from the Land Registry and then remortgaging the properties. A Midlands-based gang got away with some GBP500,000 in this way.

Another Surrey-based man simply took down details of passing cars and then approached car brokers claiming to be an agent working on behalf of a non-existent customer, and set up financing agreements with the money going into an account he controlled.

Banks and companies need to remain vigilant
Whereas the Government suffered heavily in 2007, financial institutions and other corporates enjoyed a fall in the value of frauds against them. GBP37m of fraud against banks came to court in 2007, substantially down from over GBP140m in 2006, while commercial business suffered GBP24m of fraud compared to GBP81m a year earlier. Nevertheless, particularly in the current economic climate, corporates need to remain extremely vigilant to the fraud threat.

Employees and management carried out roughly the same number of frauds (36 and 34 respectively), again down from 2006 (54 and 48). Once again though, management inflicted significantly more damage on their companies with their frauds totalling GBP54m, double the GBP27m that employees perpetrated.

Taking the rap
Other fraudsters were more creative in their efforts, such as the Northern Ireland man who routinely removed barcodes on items in a hardware superstore and replaced them with his own false barcodes so that he paid less then the items were worth. He then sold the goods on eBay and made an estimated profit of GBP100,000 before he was finally caught.

Another fraudster was brought to book because he could not resist recording his exploits in a hip-hop video. The rapper from London incorporated rhyming lyrics in his songs about his involvement in stealing scores of high performance cars and selling them under false identities. The scam was worth over GBP600,000.

Not just a London problem
While London and the South East was once again the dominant centre for fraud, with some 65 percent by value (GBP655m) and over 35 percent of the cases (77), other parts of the country also saw significant levels of activity. There was some GBP200m of fraud in the North West (30 cases) and GBP117m was recorded in the Midlands (31 cases).

Hitesh Patel concluded: “Given the developing economic conditions, companies and individuals need to be more alert than ever to the fraud threat. At a company level, they should bolster their routine monitoring and oversight processes with the use of data analytical tools to identify any unusual or suspicious trends. As individuals meanwhile, we all need to be vigilant and protect our personal data. The bottom line is that the cost of fraud goes beyond the financial. The emotional and social impacts are often forgotten.”