If you are subject of a dreaded inquiry from the tax man, rest assured the probe into your financial affairs is not random.
HM Revenue & Customs is virtually managed by a huge software ‘brain’ called Connect.
And that’s just what it does. Connect sucks in huge swathes of data from financial firms like banks, credit card providers, PayPal, eBay and Amazon.
The £80 million computer system analyses the data and compares the information against tax returns.
Any anomalies, like unexplained income appearing in the bank that could be cash-in-the-hand transactions or someone who appears to have a luxury lifestyle funded from beyond their means becomes a target for an investigation.
Uncovering tax cheats
In the first four years after Connect was introduced, HMRC collected an extra £4 billion in tax from suspected tax avoidance detected by the system.
“Connect allows us to cross match data to uncover hidden relationships between people and organisations, making it easier to see patterns, links and networks that would be impossible for the human eye to spot,” says HMRC.
“It quickly establishes links that enable experts to identify suspicious businesses, individuals and transactions for further investigation. It allows us to see more information in one place for a single taxpayer and has the capacity to find anomalies between information such as bank interest, property income and other lifestyle indicators and compare it to what a customer is paying us in tax. Manually interrogating such data would take weeks or even months.”
Spoofing Connectby trying to avoid detection is almost impossible because the data sources are so vast and far reaching.
Property letting is tracked from letting and estate agents as well as online agents like AirBnB.
Selling stuff you no longer needed on eBay is monitored – as well as payments into PayPal and online accounts.
Government departments and councils routinely share data like property ownership records and financial information about companies.
HMRC says Connecthas linked information in 22 billion lines of data – a pile of paper that would be as tall as 800 Shard skyscrapers.
The impact of Connect on taxa investigation is far-reaching and expanding. The system already generates enough leads to keep 3,200 staff busy and plans are in hand to collect even more data.
More than ever, Big Brother is watching to make sure you pay the right amount of tax.