Unit 3 Topic 4: How fraud, theft and taxation affect business

Pre- starter What is the difference between fraud and theft? Fraud and theft are both ways that people use to steal money or property from others. The difference between the two terms is that ‘theft’ implies an act of physically taking the property or money, whereas ‘fraud’ involves deception and dishonesty: obtaining money by false pretences. There are other words for fraud – scam, con, swindle, cheat, ‘cooking the books’ – but they all amount to the same thing: someone takes something that legally belongs to someone else.

A 2013 report by the UK National Fraud Authority estimated that fraud costs private business around £21 billion per year in lost revenue. Who pays?

Types of fraud 4.1.1 Types of fraud lets read together

What is the impact of fraud? Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. What is the impact of fraud? The impact is wide! Illegal activities: types of fraud and theft, costs of illegal activities: investigation costs / loss of goods / increased costs / reduced service and reputation. Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. The impact is wide! Impact of costs: passed on to customer or taxpayer; economising in the business (eg redundancies, changes to employee benefits). Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. The impact is wide! Cost of production of goods / provision of services; costs passed on to consumer; accountants employed to manage tax and tax avoidance. Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Theft Two main types of theft Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. Theft Two main types of theft Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Suggest 5 top tips after reading the information on this website: Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. There are things small businesses can do to protect themselves against fraud. Suggest 5 top tips after reading the information on this website: http://www.actionfraud.police.uk/small-businesses-know-your-business Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

How might Sue Baker’s cafe be affected by fraud or theft? Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. How might Sue Baker’s cafe be affected by fraud or theft? Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Starter – whiteboard - Recap What are the different types of internal and external thefts and fraud?

Imagine you have started your small business. Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. Imagine you have started your small business. Which taxes will you need to pay and what will this do to your profits? https://www.gov.uk/topic/business-tax/self-employed Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Find tax planning in the topic 4 text sheet. Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. Find tax planning in the topic 4 text sheet. What is tax planning? Is it okay for businesses to do it to reduce tax bills? Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. Starter in your books Exam question refer to case study (Jonathans taxi) M:\IFS\TMotson\Unit 3 Outline the possible impact of fraud and theft on the effective management of money by Jonathan’s taxi enterprise. (3 marks) Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Exam question refer to case study Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. Exam question refer to case study Explain the positive impact that Jonathan’s successful enterprise could have on his employees, and the positive impact that the employees could have on society. (6 marks) Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

What happens if big businesses evade taxation? Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. What happens if big businesses evade taxation? Let’s read this together. http://www.independent.co.uk/news/uk/politics/revealed-47bn-corporation-tax-lost-through-evasion-and-avoidance-as-royal-mail-is-sold-for-650m-less-8874873.html Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

What happens if big businesses evade taxation? Aspire: Suggest how business can manage taxation. Challenge: Describe the impact on a business of fraud and theft. What happens if big businesses evade taxation? Use the internet to find other examples. Keywords: reputation, loss, decline, fail, bankrupt, supply and evade.

Unit 3 Topic 4: How fraud, theft and taxation affect business Read the topic summary, check the glossary and take the quiz