Businesses in the private sector are losing a total of £144bn a year through fraud, with £12bn being lost through payroll fraud alone, a new report has found.

The Annual Fraud Indicator 2016, conducted by the UK Fraud Costs Measurement Committee with Experian, PKF Littlejohn and the University of Portsmouth’s Centre for Counter Fraud Studies, found the annual total cost of fraud in the UK stands at £193bn per year.

Gary Webb, of the Bond Payroll Services, noted that any business can be prone to fraud. “Payroll fraud goes on quite regularly in businesses without them knowing about it. There is high and low-level fraud going on. Low level [fraud] is things like adding on a few miles onto an expenses claim. Then there are people who are genuinely out to defraud a company, such as the ghost employee level [ie the number of people on the payroll who don’t actually work for the company in question] – where people involved in the payroll process actively seek to defraud a company.”

Webb  went onto comment to the CIPD that implementing a strong audit system is often necessary. “From a people point of view, one of the key things is knowing your people – who is doing the payroll? [Regularly] check there are no duplicate employees or duplicate bank transfers; it is pointers like that which will give you an indication that something isn’t right.”

While payroll was found to be responsible for 8 percent of losses through fraud in private businesses, the biggest source of loss was found to be related to procurement. the prompted an annual loss of £127bn.

The report said some of the most common ways this occurs include legitimate suppliers adding unauthorised costs to invoices; legitimate suppliers colluding with staff to add additional costs to an invoice; fraudulent suppliers and staff submitting false invoices for payment; and fraudulent staff diverting legitimate payments to themselves.






Rebecca joined the HRreview editorial team in January 2016. After graduating from the University of Sheffield Hallam in 2013 with a BA in English Literature, Rebecca has spent five years working in print and online journalism in Manchester and London. In the past she has been part of the editorial teams at Sleeper and Dezeen and has founded her own arts collective.