HMRC"s Connect targets taxpayers" online information
HMRC’s Connect - its data analytics tool which enables the taxman to drill down into over one billion pieces of data, analysing the digital patterns of behaviour, payments and money flows of individuals and business - is increasing scrutiny of individuals on social media, using third-party sources of information and even analysing bank accounts held in other countries report Harris & Co accountants Northampton.
HMRC’s Connect uses existing information – provided through self assessment returns, RTI salary and pension reporting, savings accounts, benefits and tax credit data, Land Registry data, the Vehicle Licensing Agency and credit card sales – to cross-check business and individual taxpayers’ against other datatbases. This process generates leads for investigations when discrepancies in income versus expenditure are discovered.
Connect interrogates 30 databases in total, which include information on properties and cars individuals own, their salaries, bank accounts, interest paid, loans, and credit card purchases.
A team of 150 data analysts apply sophisticated profiling and modelling techniques to the data using the analytical compliance environment (ACE) platform to search for patterns and behaviours that signify tax anomalies.
HMRC employees are now using robot tools to review online traders on sites such as Gumtree, AutoTrader and eBay. Connect can evaluate whether the level of sales suggests the activity is actually business trading or just a hobby. To manually compare the data with each individual’s tax returns would take years but Connect can do it virtually instantly to produce target lists for its E Marketplaces campaign.
Snaps of holidays and luxury items on Facebook, Tweets and information from all forms of social media is used to build a lifestyle profile of individuals who are under investigation for tax or benefits fraud.
Bank accounts are also under scrutiny – HMRC receives annual data from 25 other EU member states (the others operate a withholding tax system) under the EU savings directive. The data shows which UK resident individuals have an offshore account and what interest was paid on the funds.
But account holders with financial assets in other jurisdictions are also under increasing watch and reach of Connect as different countries sign up to multilateral information exchange agreements which permit the sharing of information on offshore accounts and assets.
So far, 54 countries, including all major, global financial centres, have signed the information exchange agreements.