Dubbed the Snooper Computer by some, HMRC's technology is technically defined as the social network analysis software and data mining system. A bit of a mouthful!
It was introduced in 2008, when HMRC made an £80million investment in the implementation of this project. Since then they have recovered £3 billion of additional tax revenue, a substantial return on investment.
It has been deployed to uncovered fraudulent or criminal activity, namely tax evasion. It gathers data from many government/social databases to paint a digital fingerprint of your finances. They use predictive analytics similar to credit scoring to build a profile and highlight any inconsistencies with your tax returns.
At the last recorded count there was 22 billion lines of data held on UK individuals, and this grows daily.
HMRC can build a comprehensive profile on an individual by using various sources to assess their spending habits, lifestyle and cross references this with the information reported to them in tax returns.
They currently have access to;
- Bank and Credit Card Accounts (in more than 60 countries worldwide)
- Email and Browsing History
- Landlord Register
- Land Registry
- Companies House
- Council Tax Records
- Online Trading Platforms (such as Ebay, Gumtree, Etsy, etc)
- Social Media
This enables HMRC to move much quicker in the evidence gathering process and something that would have taken months to tackle previously, now can be done in a matter of minutes.
This is then paired with an Officer to continue the investigation, and active job vacancies listed with HMRC currently recruiting for 'Higher Technical Surveillance Officers' listed on LinkedIn denote that duties will include; the assembly, repair and installation of covert audio/video equipment and tracking equipment really underline just how closely you could stand to be monitored.
As it stands HMRC are able to issue penalties for standard non-submission of tax returns, and deliberate evasion of tax at up to 200% of the tax owed. With serious tax frauds attracting an unlimited fine and up to 7 years in prison.
In this modern Digital Age, it isn't a case of, IF you will get caught being dishonest about your earnings, it's more like, WHEN!? HMRC also have the ability to add you to a 'Deliberate Defaulters List', which means any interaction between you and HMRC will be monitored until such times as they remove you from this, if ever!
It's been stated by many tax professionals in recent months, that there is no longer such a thing as a 'random tax investigation', hinting to the fact that HMRC are far too under resourced to carry out 'random' checks on individuals, and that if you are receiving an enquiry from HMRC, there is most definitely a reason behind it.