Taxman’s spy computer checks your Facebook posts Shipleys Tax Advisors

WHAT with cyber-snooping being all the rage in recent times it seems the taxman has got in on the act too.

HM Revenue & Customs use its super-computer, costing over £100m and many years to make, to identify those who may have paid too little tax.

The powerful system, benignly dubbed “Connect”, now automatically gathers information from a myriad of government and corporate sources to create a detailed profile of each taxpayer’s financial position. Where this differs from the information provided by the taxpayer, the account is flagged up and subject to further possible investigation.

Connect now automatically collects information from over 30 databases – ranging from details of taxpayers’ salaries, bank accounts, loans to property and car ownership.

The system’s data-hoarding does not just stop at the income people have received from work and investment. It also amasses data from the various digital footprints left by taxpayers online.

The powerful system now automatically gathers information from a myriad of government and corporate sources to create a detailed profile of each taxpayer’s financial position. Where this differs from the information provided by the taxpayer, the account is flagged up and subject to further possible investigation.

It collates data from diverse sources such as Airbnb and eBay, as well as obtaining anonymised information from Visa and Mastercard transactions, enabling it to identify areas of likely underpayments which it can then target further.

HMRC also has powers to request one-off bulk data from third parties where there may be particular cause for concern. Insurance companies, hospitals and dentists supplied information to assist with the Tax Health Plan, for instance.

For those with investment properties, it can also access Land Registry records to see houses purchased/sold to check against information on a tax return. In addition, further sources enable it to determine if properties are being rented out and whether that income has been declared. Crucially, it can also determine if someone is likely to be able to afford such properties, or whether they are suspected of having used previously undeclared income or savings.

Particularly striking is the gathering of information from social media. HMRC are now monitoring online posts about holidays, parties and purchases. They may wish to ask questions where they do not feel lifestyle fits with an individual’s reported income.

The tax profession has raised concerns that HMRCs growing reliance on automated systems could mean an increasing number of innocent taxpayers facing investigation. Whilst many of the leads generated by Connect’s data collection maybe worth following up, a proportion will be unfounded causing unnecessary stress and anxiety to those targeted. A surface analysis of data or online information could quite easily lead to misinterpretation. An exaggeration over twitter or Facebook, for example, could paint a highly inaccurate picture resulting in false leads.

Particularly striking is the gathering of information from social media. HMRC are now monitoring online posts about holidays, parties and purchases. They may wish to ask questions where they do not feel lifestyle fits with an individual’s reported income.

What HMRC can find out about you

  • UK & overseas bank accounts, pensions: From 2017 HMRC will receive information from banks in more than 60 countries.
  • Web browsing and email records: Under the ‘Snoopers Charter’ HMRC will be able to access individual’s digital information
  • Property sites -adverts on the internet e.g. Rightmove and Zoopla
  • Land Registry records: To determine properties purchased, stamp duty paid and capital gains tax
  • Earnings: From any employer, including those you have worked for casually, or on an ad-hoc basis. This includes any company benefits received. It can also access child benefit and maintenance payments through the child support agency
  • Internal tax documents: Systems show council tax paid, relevant VAT registration, previous tax investigations, last year’s tax return (or absence of one)
  • Visa and Mastercard transactions: Anonymised information on all payments
  • DVLA: Details of cars purchased and owned by individuals
  • Online marketplaces: Websites such as eBay and Gumtree can be accessed to weed out regular traders
  • Social media: The Connect system can also look at public social media account information, including from Twitter, Facebook and Instagram

 Connect cross-references information from many other UK government databases, including:

  • Council tax
  • Companies House
  • DWP (former Benefits Agency)
  • The electoral roll
  • Gas Safe Register
  • Insurance companies

HMRC also independently looks at Google Earth.

Shipleys Tax has many years of protecting taxpayers and succeeding with tax investigations with HMRC, if you need help please contact us 0114 272 4984 or email info@shipleystax.com.