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The Computer Says Yes to Taxman's Attack on Tax Evaders

With foraging behaviour of honey bees, HMRC has grasped opportunities offered by clever use of technology to uncover hidden agendas, income and wealth to sharpen the taxman’s capability to counter tax evasion.

HMRC’s “Connect” system

This new HMRC system contains more than a billion bytes of information, including taxpayer records as well as third party data and details accessed from the internet. Basically, the UK tax authorities have a huge range of data including income, interest on wealth in bank accounts, taxes paid and unpaid, business ownership, and data from other tax authorities in other countries.

HMRC uses “Connect” by way of analytics to spot connections that show the true levels of income and spending that reveal those evading their taxes. Because of this HMRC has been recognised as an example of excellence in the UK, having recently won major awards for “IT outsourcing project of the year”, the British Computer Society “Big Data project of the year” and the “Civil Service Science and Technology Award”.

Offshore bank fraud

Access to offshore bank accounts is one of the key areas that are helping HMRC’s Offshore Coordination Unit achieve their tax-yield targets.

Cross-border initiatives between tax authorities has enhanced tax information exchange with USA and the Swiss, etc with agreements that set a new benchmark of international tax transparency.

Whilst HMRC’s menu is substantial, those currently in need of advice are safe deposit box holders as banks accused of inadequate anti-money laundering checks are becoming jittery, executors of estates vested abroad that somehow were not within the will and Inheritance Tax Return, diverted untaxed profits, and so forth.

Of course, there are informal banking arrangements involving “Hawala” transactions and HMRC suspicions of diverted business profits being remitted out of the UK.

Targeting high risk groups

To date HMRC have launched around nine campaigns including targeting offshore assets and high-risk affluent tax payers. By the end of October 2012 the taxman claims that £650 million has been brought in. HMRC believe that their strategy has brought about changes of behaviour across whole sectors.

HMRC will continue in this vein because the Treasury is generally accepted as being bankrupt and these new ways of clamping down on tax evasion, and shifting attitudes and behaviours are seen as the way forward by HMRC Officials.

I agree that tax evasion is illegal and should not be tolerated, but neither should overzealous tax inspectors breaching human rights whilst interrogating unrepresented taxpayers under duress.

Those wanting to bring things to the surface - managed on their terms with cards face up on the table - can contact me to advise on the appropriate disclosure route.