HMRC received £1bn worth of suspect invoices in three years

HM Revenue & Customs has been on the receiving end of £1.05 billion worth of suspicious invoices over the past three years, the tax authority has disclosed.
The tax office rejected a total of 29,360 invoices between 2021-22 and 2023-24, it revealed after being served with a freedom of information request.
The £1 million-a-day stream of rejected invoices ranged from fraud attempts to supplier mistakes and legitimate requests for payment which were later honoured, but HMRC has declined to say in what proportions.
Fraudsters targeting organisations with fake invoices have long been a problem, with the culprits finding ingenious ways to mislead victims, and accounts departments fighting back with more sophisticated systems to identify suspicious claims.
Jason Kurtz, chief executive of Basware, an accounting software company that made the FoI request, said: “It’s clear that large organisations like HMRC are the perfect target for fraudsters seeking to extract funds using fake invoices.
“Fraud can take many forms, from outright fabrications with false bank details to suppliers seeking additional payments for services which were never delivered. The huge volume of rejected invoices in this case underlines the serious challenges facing HMRC and other large organisations.”
An HMRC spokesman said: “The percentage of invoices we rejected is just 2.5 per cent of all those received in that period. The volume and value of rejections is not a reflection of levels of fraud and error but is testament to the robust and effective controls we apply.”
Invoice fraud is hard to measure because organisations don’t always know they have been defrauded or own up to it. UK Finance estimated that £93 million was stolen from UK businesses through invoice fraud in 2018, with the average loss put at £20,750 an episode.
HMRC is under pressure to reduce fraud and error in all areas including tax evasion. MPs on the public accounts committee last year said an “eye-watering” amount was being lost.
In its FoI response HMRC disclosed that it spent £814 million over three years employing an average of 4,800 staff in its Customer Compliance Group, which is responsible for enforcement and compliance activities.
HMRC reported £349 million of rejected invoices in the 2021-22 financial year, £456 million in 2022-23 and £241 million in 2023-24.
These included invoices subsequently paid, invoices not paid, invoices not paid due to supplier error, invoices not paid due to goods and services not being received and invoices not paid “due to system issues”.