The ongoing economic turmoil can only get worse if you make your business vulnerable to fraudsters. As the security measures and technological advancements increase, the tax and cyber-security fraudsters are using new methods to squeeze money out of numerous businesses across the UK.
One of the most common types of frauds is spoof emails that can impersonate a senior executive member of your company to deceive your employees. Whether its spoof email or major tax scandal, the need of the hour dictates that your small business takes some urgent protective measures to safeguard its operational activities.
Pandemic or no pandemic, the capitalist show must go on. Therefore, ensure that your payment procedures, and important clients’ details are secure. Here are some of the most common financial frauds your business will have to look out for in the UK:
Tax Fraud
It shouldn’t come as a surprise that tax fraud tops this list. Tax evasion fraud is more common than businesses realize. However, HMRC is aware that companies that misreport their amount of earnings or expenses are not always doing it intentionally. Therefore, seek out special exemptions and avoid the practice of over-reporting or under-reporting your costs and earnings.
Return Fraud
Primarily, return fraud is common among retail businesses. However, return policies can also impact your business if there’s no exchange policy in place that enables customers to return defective items. That said, this type of fraud works both ways.
Often, people lie about their purchases, receipts, or even return of stolen goods. So, make sure you inquire about receipts for all of your exchanges and returns. When it comes to refunds, there should be more insistence on the use of cash rather than credit cards.
Identity, Intellectual Property, and Data theft
There’s a good chance your business deals with sensitive information, and that means there’s a likelihood of intellectual property or personal data theft. A lot of times, for instance, employees knowingly or unknowingly can leak your business’ patents or secrets to your competitors.
Identity theft can practically tarnish your market reputation for an indefinite period. The solution lies in restricting access protocol to your important company documents. In fact, place a security regulation to deal with the categorization of sensitive information.
Financial Reports Fraud
The last thing you want to do is dupe your investors or business partners through the falsification of revenue, sales, or assets and liabilities numbers. You can, for example, delegate separate accounting functions. Furthermore, pay close attention to your financial statements and always be ready for quick reevaluation to pinpoint inconsistencies or incorrect information.
Asset Misrepresentation
Apart from common cyber security crimes and invoice schemes’ fraud, you need to make sure there’s no misappropriation of your assets in the eyes of the HMRC. It is one of the most common types of fraud authorities can spot.
Look out for missing inventory, faulty accounts, and forged checks, to determine asset misappropriation. Small businesses, for instance, prefer to entrust their financial activities solely to the employee who is reliable and trustworthy.
What Should be Your Ultimate Solution?
Realistically, there’s no such thing as a single solution that can protect all of your financial vulnerabilities. And that’s because different fraud requires a unique protective solution. Ideally, you should make fraud detection and reporting part of your business’ culture. In fact, encourage individuals to pinpoint red flags through an anonymous and safe anti-fraud approach.
Wrap Up
You should have a comprehensive anti-fraud policy in place to ensure you don’t have to suffer the consequences of someone else’s actions. And if there’s a possible violation of an agreement, conduct surprise inspections and audits consistently. Besides, regular anti-fraud checkups will allow you to identify fraudulent behaviour and reduce the damage beforehand.
We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.
Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our consultants if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.