Stratford Hamilton, Director and insolvency specialist with over twenty years of experience mainly associated with fraud and investigation highlights how fuel fraud is driving insolvencies, and the implications of the crime that follow.
Fuel fraud is a form of white-collar crime where individuals or corporations deceive the government or customers in the manipulation of fuel prices or quantities, or via theft of fuel and fuel containers.
This type of fraud can lead to significant financial losses for those impacted and, in some cases, can result in insolvency for the parties involved.
We have recently seen an increase in Insolvency cases involving fuel fraud which often involves complicated legal and financial issues. The insolvency practitioner tasked with managing the case must investigate the situation thoroughly to determine the root cause of the fraud. They must also determine the extent of the fraud committed and how it has impacted creditors.
For creditors who are owed money by the company, the insolvency process can be long and uncertain, leading to further financial losses. Fuel fraud in the UK is a serious issue that affects both consumers and businesses alike, and costs the UK economy millions of pounds each year.
We have recently been appointed on several cases involving the theft of fuel and containers. The cases involve not only the non-payment of fuel, but also the avoidance of paying tax due on the fuel resulting in a loss to HM Revenue & Customs.
HMRC has been actively taking steps to combat fuel fraud in recent years. This has included increasing engagement with industry stakeholders, using more sophisticated auditing techniques and cracking down on illegal operators. However, despite these measures, fuel fraud persists and continues to have a significant impact on both the economy and the environment.
Companies and individuals involved in fuel fraud crimes continue to evolve in their attempts to deceive suppliers into providing fuel and containers to businesses who are either fictious in nature, or have no intention of ever paying for the supply.
The insolvency of the company committing these crimes appears to have little or no impact on the individuals involved or the companies committing the fraud, and repeated ‘phoenix’ style companies, i.e. companies that arise from a previously insolvent company, continue to appear.
Our specialist investigation team continues to work on a number of these cases in an attempt to recover funds for the creditors, who have been the victims of this kind of fraud. It remains to be seen whether the high levels of fraud, highlighted by the Insolvency Service and other government bodies, indicate this is a new trend of fraud involving fuel and the duty it carries, or just a resurgence of cases in this sector due to the current financial climate.
<—- Back to our AdvisoryMatters hub