Economic woes see UK fraud levels reach an all-time high

According to accountancy firm KPMG's annual Fraud Barometer, the volume of UK cases snowballed in 2010. Fraudsters made away with 1.4 billion in 314 incidents, the highest level recorded in the report's 23-year history and a 16 per cent increase on the previous year.

In Scotland, the value rocketed to 43.4 million last year, more than double 2009's cost of 20.8m.

The largest victim of fraud across the UK was the government. KPMG said 42 per cent of all cases were against the public purse, totalling 571m and representing an increase of nearly 20 per cent, from 59 instances in 2009 to 70 in 2010.

One of the largest cases was worth 103m, in which a 48-year-old man fraudulently claimed for tax breaks on research into green technologies.

In Scotland, although the actual number of reported frauds fell slightly from 18 to 16, the increase in value was due to three linked cases involving illegal fishing frauds, which between them totalled 37m.

Other major crimes in Scotland included the case of an Edinburgh gambler who was found guilty after taking out 1m worth of loans by falsifying invoices and direct debits.

Another involved an accountant who began embezzling his employer only four months after being hired. He made off with 450,000 by taking advantage of a colleague being on long-term sick leave to bypass controls.

Ken Milliken, associate partner for risk and compliance for KPMG in Scotland, believes this trend will continue into 2011.

He said: "Businesses trying to survive and individuals seeking to maintain lifestyles by whatever means will have undoubtedly driven the numbers up - it is these same vulnerable groups that will have been the prey for professional criminals.

"Economic uncertainty and fraud make good bedfellows and as the austerity measures hit the public purse, people might be tempted to verge into illegal activities.

"If this happens, then it is likely we will maintain the high number of cases being taken to court."

KPMG found that business managers wreaked the most damage in corporate frauds, as those in positions of trust and authority were able to cause greater financial damage than employees.

There were 61 cases of manager fraud, costing 419m, in 2010 compared with 79 cases involving more junior staff, whose activities cost 129m.

The accountancy firm warned that the government needed to tighten its anti-fraud measures in order to prevent a rising tide of corruption."Fraud is not a victimless crime, particularly at a time when the country deficit is so high," said Milliken.

"Anti-fraud measures need to be reviewed and amplified by the public sector to combat this assault."

The UK government has recently made 900m available over the spending review period to tackle those who undermine the tax system.

They have estimated that this should bring in around 7bn per annum in additional tax revenues by 2014-15.