By David Gregan, 26th January 2016
At the moment Tax avoidance seems to be a popular topic on the international stage at such event as the G20 and it is no surprise to learn the Her Majesty’s Revenue & Customs (HMRC) are investing heavily to redeem lost revenue.
Connect Digital data system
Since 2008, HMRC have invested over £80 million in the development of “Connect”, a digital data gathering system aimed at combating tax avoidance. The Connect system is a sophisticated data matching tool which cross checks 1 billion pieces of data from the HMRC records and 3rd party data to recognize links between organisations, people and income. It then matches these results with information the taxpayer has provided and flags any discrepancies. Tax investigations are then carried out where deemed necessary. The information gathered by Connect comes from 30 different sources such as the Companies House, Government Agencies, banks and Social Media accounts such as Facebook.
Concerns about Connect
Connect is an extremely important tool but he has had a lot of criticism most of which in relation to the security of the data collected. As the system has access to and stores such a vast amount of information on taxpayers, it is bound to trigger public anxiety.
Connect originally went online in 2010 and has generated 62% of all tax enquiry cases in the first two years. This rose to 83% between 2013 – 2014 and has led to £3 billion in additional revenue to the state. Connect has also reported that the system has prevented a loss of £1.4 billion revenue as a result of criminal investigations into tax avoidance. Because of the systems success, HMRC are keen to expand this operation.
From September 2016, Connect will have the power to access data held in banks and other financial firms based in British Overseas Jurisdictions. Connects reach will then expand further in 2017 and will have access to data from over 60 countries as part of the Common Reporting Standard.
With the growing number of taxation information sharing agreements worldwide, it is time for everyone to get their tax affairs in order.Contact US