HMRC utilises Connect tax evasion system
11th January 2017 | News
HM Revenue & Customs (HMRC) is now making use of its £100m super-computer, designed to pinpoint those who may have evaded paying all the tax they owe.
As opposed to relying solely on data provided by UK taxpayers, HMRC is utilising its new 'Connect' system, which receives information from a plethora of government and corporate sources to provide an accurate profile of an individual’s personal income.
In the event this data varies from the information supplied by the taxpayer, the account will be flagged and be subject to further HMRC investigation.
HMRC has already used the new system to warn a selection of taxpayers that they may have underpaid. In December, it distributed 10,000 letters to individuals who filed a 2014-15 tax return without a complete declaration of savings interest received.
The tax authority confirmed the Connect system gathered data from banks, peer-to-peer lenders and other financial institutions to compare against individuals’ tax returns. Any discrepancies were subsequently noted in the warning letters to individuals last month.
An HMRC spokesman said: “We have written to customers who appear to have under-declared untaxed interest.”
The Connect system also looks beyond the income people receive from work and investments.
George Bull, Senior Tax Partner at RSM, said: “Connect broadly deals with information spontaneously available in government departments or as part of the digital footprint that people leave when they use the internet.
“We all leave a massive electronic footprint of where we are, when we are away, what we do and what we spend.”
The Connect system can also access Land Registry data to view properties purchased and ascertain whether the correct amount of Capital Gains Tax has been paid. It can also assess whether properties have been rented out and, if so, whether that income has been declared to HMRC.
As a consequence of HMRC’s tightening grip on tax evasion it certainly doesn’t pay to try and mislead the tax authorities.
If you’re self-employed or a small business owner, your local TaxAssist Accountant can work with you to accurately calculate your tax liabilities, prepare and submit your tax return to HMRC with minimal hassle; allowing you to concentrate firmly on the running of your business.
If you’d like minimise your risk of an HMRC investigation into your tax affairs, talk to your local TaxAssist Accountant today on 0800 0523 555 or drop us a line using our online enquiry form.