Monday, 9 August 2010

£0.5m fraud the tip of an iceberg

The folly of the State in trusting in Leviathan national computer systems rather than local staff in collecting tax is exemplified in the case of Ukrainian fraudster Dmytro Shepel. Using a fake NI number and a fake Lithuanian passport and ID document, he did as many non-EU Eastern Europeans do and got himself a job here. All went well it seems until he sampled HMRC's online self-assessment computer system and realised just how easy it was to fool the computer into disgorging a tax repayment.

Keeping his claims small, around £3k, at around a level we presume at which the computer could dispense money without human intervention, he made a total of 218 claims for fictitious people, the proceeds of which were paid into 74 different bank accounts. He netted £559,497.42 before he was caught.

Since I've heard of this fraud from a few other sources, I'll bet it's widespread. Not to the extent of 218 false people, but maybe one or two, each netting a couple of grand or so. The less greedy the fraudsters, the longer they can get away with it.

For both taxes and benefits, the lesson to be learned is that the more local they are, the less likely they are to be subject to error or fraud.

1 comment:

Hector said...

Nothing that ever got bigger got better.
We are still in the Japanese created then American business modelled, bigger=better (economies of scale blah blah).
Well folks, it is all a crock, small is beautiful and infinitely more manageablely; flexible, efficient and human and of course less open to massive fraud, are you listening - Brown - haha that'd be the day!!/Cameron/ UK government/EU politburo ?