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Fraud cases breached £1bn level in 2007

UK.gov = number one victim

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Organised gangs pushed the value of fraud to a 12-year high last year, with the UK government being the largest victim of their criminal activities, according to a new survey.

KPMG Forensic, which has been monitoring fraud levels for 20 years, said today that the total value of cases heard by UK courts in 2007 - £1.02bn - was the highest recorded since 1995.

It's a huge leap from the previous year's £221m figure. Despite that, the number of fraud cases was in fact down from 277 in 2006 to 197 for the year.

Organised gangs made up close to 90 per cent, or £889m, of all fraud cases brought to crown courts in 2007.

The government proved to be the most lucrative target for fraudsters involved in identity theft rings, benefit scams and VAT fraud, with the value of 68 cases totalling an eye-popping £833m.

Carousel fraud continued to account for a huge number of losses to Her Majesty's Revenue and Customs (HMRC) last year.

KPMG said it was too early to call on whether or not the reverse charging scheme introduced by HMRC last summer to crack down on the growing EU-wide VAT scam involving mobile phones and computer chips would have any "material impact", or if criminals would simply target other small tech goods.

It's also worth remembering that KPMG's figures only cover cases that make it to the courts. Treasury estimates of the amount lost to VAT fraud alone have ranged as high as £3bn.

Meanwhile, fraud against banks dropped significantly to £37m from more than £140m in 2006. Companies also saw a decrease, suffering £24m fraud losses compared to £81m a year earlier.

However, KPMG warned that businesses could expect to see an increase in company fraud if the widely forecast economic downturn starts to bite.

"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," said KPMG partner Hitesh Patel.®

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