HMRC is increasingly proactive in using interconnected data. This means they are catching more tax evaders in Loughborough and Leicester than ever before by simply comparing sources of information. All sorts of issues are identified – including buy-to-let landlords not declaring their rent, self-employed selling on Amazon & ebay, sales above the VAT threshold, someone working and not declaring the income on a tax-return (particularly if the money ends up in a bank), people living beyond their declared income, car purchases not justified by income etc, etc etc …
A few months ago we published an article specifically about buy-to-let landlords and tax. If you are a landlord, you may be interested in reading it. Just click through.
The computer system used by HMRC, called Connect, is evolving all the time. They can compare data from different systems, and they use this information to determine who to target for enquiries. The list of (known) data sources is long – and is being added to on a regular basis.
See how many of these include information about you:
• Tax Returns (obviously)
• Employment income (again pretty obvious)
• DVLA – driving licence and vehicle ownership records
• Electoral Register – is the owner listed as a voter?
• Council Tax Register – is the council tax payer a tenant?
• Land Registry – do you own a house where you don’t pay Council Tax or appear as a voter?
• Gas Safety Register – if you pay for a gas safety certificate, do you receive rent?
• DWP records – claimants tell DWP who they pay rent to
• Companies House information
• Credit and Debit card transactions – card processors now have to send data to HMRC
• Bank transaction information
• Pension Fund information
• Amazon & ebay (and other online shops) transactions
• Credit Reference Agencies data
• Passenger and flight information from airlines
• Data from other countries under the automatic tax exchange agreements
Connect applies AI (Artificial Intelligence) techniques to compare the different data sources and this is much faster than the previous manual system.
HMRC say that they have already collected £3 billion extra tax using these methods – and it has cost them less to do so. It has also prevented an additional £4 billion of fraud by early intervention.
Hopefully, you conduct your affairs correctly and have nothing to worry about. You may have doubts about whether you are doing something correctly, or you may already have been contacted by HMRC. We are happy to help you ensure your tax affairs are being dealt with correctly. Contact us on (01509) 816150 for a chat and an appraisal of your situation.
Another blog you may find of interest..