HMRC'S "Snooper computer": exploiting BIG DATA to catch would-be tax dodgers

HMRC'S "Snooper computer"

"Snooper computer", super computer, The Telegraph's article should make every would-be tax dodger sit up and appreciate how now HMRC can access both their digital and analogue presence quite easily with its new system called "Connect".

Were you aware as you filed your self-assessment tax return for 2015/16 that HMRC's "Connect" system was now fully up and running for the first time?

"Connect" can track anyone online, off-line, anytime. HMRC has new legal powers to look into transactions with banks, mortgage providers, credit cards; it can access all governmental departments, i.e. the DVLA, the Land Registry, councils, the benefits system; and it is able to access data from eBay, Airbnb, online lenders, etc. In fact, the system and the army of well-trained personnel behind it, have pretty much unlimited access to our details under UK law.

We warned you back in 2014 of HMRC's powers, but if we thought that was the government getting tough, now HMRC has powers to get even tougher. There is a whole "Beware HMRC" section on our blog and it makes for quite interesting reading.

No one wants to scare you, but to be aware is to be forearmed! "Connect" is designed to identify anyone who might have under-declared earnings and paid too little tax, so if you've ever considered not declaring rental income, employment income, other income from online sales, or some little side-line business you run, think carefully before doing so.

We've already told you about "benchmarking", that is HMRC looking at one small business or freelancer/sole trader business against another. Say HMRC looks into one building firm that declares £15,000 income, against another that declares £30,000 income; why might it be that one is earning double what the other earns? Of course, there may be good reason, but HMRC might ask why. With "Connect", it's possible that one of the tax inspectors might discover the £3 million house and the £300,000 super car so-and-so owns, and ask: "how can she/he afford those luxuries when they declared only x-amount of income?"

Here's a list of some of the places HMRC might snoop now, quite legally, in a drive to stop tax fraud, evasion, and aggressive tax avoidance, HMRC can now access:

• UK bank accounts and bank accounts in over 60 countries;
• Visa and Mastercard transactions; information on all payments;
• Land Registry records, property purchases and sales and stamp duty;
• DVLA, vehicles registered to you;
• Company accounts; VAT registration; previous tax investigations; previous tax returns;
• Earnings via PAYE, full time or casual, any company benefits received;
• Governmental departments, i.e. council tax, benefits agencies, and
• Child benefit and maintenance payments through the CSA;
• Online transactions: marketplaces such as eBay, Gumtree, Airbnb;
• Social media, e.g. Facebook where X posted photos of that £20,000 holiday she took last year!
• Browsing history and email records …

I'd advise you not to risk it! Instead, declare everything you earn and make sure you claim all the benefits and allowances you're legally allowed to claim within the system. Let your account manager at DNS Accountants work their magic with tax planning; and stay clear of attempting to make any dodgy moves such as not declaring all your income. An array of sophisticated technology, together with an army of trained tax investigators makes the likelihood of being caught out by HMRC highly likely.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.