HM Revenue & Customs have spent over £100 million on a new ‘Super Computer’ designed to catch those who have not paid the correct amount of tax. The new computer called ‘Connect’ gathers data from a wide range of sources and creates profiles of taxpayers’ income. The information is then compared to a taxpayer’s declared taxable income. Where there’s a difference, the computer flags up the taxpayer for further investigation.
HMRC is also using the information to warn taxpayers to check their tax returns to ensure they have declared all their taxable income. Last month HMRC sent letters to 10,000 individuals which it suspected had not declared all the bank interest they had received on their savings. HMRC said it had used information gathered from banks and other financial institutions and then checked it against personal tax returns. It then sent letters to those with discrepancies.
The new computer’s data trawling does not stop at taxable income received from work and investments. It also collects data from numerous other sources such as Airbnb, the rental platform, and eBay. It can also access land registry records to see what houses have been purchased. Further sources then enable it to see if properties are being rented out and whether taxable income has been declared. It can also determine if someone is able to afford such properties, or whether they may have used previously undeclared taxable income. HMRC also receives information on credit card transactions and can then seek details of individuals’ transactions.
So what can HMRC find out about you?
Land Registry Records
HMRC can check the properties a taxpayer has purchased. It can then use the information to determine if someone can afford their property, or whether they may be using previously undeclared taxable income or savings. They can also see if properties are being rented out and whether that income is being declared on a tax return.
DVLA Records
This department shares information on the details of cars purchased and owned by individuals, which could point towards taxable income that has not been declared.
UK and Overseas Bank Accounts
HMRC now receives information from banks in more than 60 countries.
Visa and Mastercard Payment Transactions
Anonymised information on all your payments can be supplied to HMRC, who can then seek details of transactions for its investigations.
Earnings
HMRC can find out what you get paid by an employer, including those you have worked for casually, or on an ad-hoc basis. This information also includes any company benefits you may have received.
Online Marketplaces
HMRC can get access to websites like eBay, Gumtree and Airbnb to identify regular traders making money and not declaring it.
Social Media
The Connect system can also look at social media account information from Twitter, Facebook and Instagram. This may reveal more about an individual’s spending habits and could indicate that they have more money than they’re declaring.
Other Taxes
HMRC can check how much council tax you’ve paid.
Snoopers Charter
The Investigatory Powers Act 2016, commonly known as the ‘Snoopers Charter’, became law on 29 November 2016. It extends the reach of the surveillance state in Britain and will allow HMRC to access even more information about you. The legislation means that telecom providers must now store customers’ web browsing and email records for at least a year and this information can then be accessed by the Government. The law also provides new powers to hack into computers and phones and to collect communications data in bulk. Privacy campaigners said the unprecedented new powers will provide an international standard to authoritarian regimes around the world to justify their own intrusive surveillance powers. Despite a 130,000 strong signature petition against the new powers it was still passed as law.