Types of tax fraud
Tax fraud can be defined in different ways, including:
Within a business, fraud can occur in:
There are 2 main categories of fraud – extractive and non-extractive.
Extractive fraud is where company cash sales are diverted to another taxpayer’s benefit. As a result, the company’s worth is reduced.
Non-extractive fraud is where the income or gains are recognised but in the wrong tax period. As a result, the company’s worth is increased.
In the UK, HM Revenue & Customs (HMRC) are responsible for the care and management of the UK tax system. Fundamentally, HMRC police the system in order that:
HMRC have the taxes legislation at their disposal to ensure that this happens.
Non-extractive fraud includes:
Extractive fraud includes: