HMRC’s new powerful computer software called “Connect” came with an initial price tag of £45 million. In its first year, it reportedly delivered an additional £1.4 billion of tax revenue.
Connect is a massive database, which has more data stored on it than the British Library. The huge range of data is built up from government departments such as Land Registry, Companies House and DVLA, as well as information from publicly accessible websites. It has information such as bank and credit card account details, overseas property and other data from tax authorities in other countries. Using a mathematical technique known as social network analysis, it detects links and identifies anomalies on a tax return.
For example, HMRC can easily identify individuals with undisclosed properties abroad. Similarly, Connect can show all the bank accounts in a taxpayer’s name.
Connect can be used to find out which cars are registered to an individual, to see if a low income taxpayer is driving an expensive car, perhaps an indication of undeclared takings.
It is believed that ebay accounts can now be matched to taxpayers using Connect, so HMRC have information to decide whether there is actually a trade being conducted, that should be taxed.
With the vast information that HMRC has at its disposal, clients need to be absolutely certain that all sources of income are included on the self assessment tax return.
We strongly recommend that all of our clients take out our insurance to protect them against tax investigation – this is more important than ever. If you do find yourself subject to a tax enquiry, Nagler Simmons can help.