HMRC is targeting tax evaders, such as ‘ghosts’ and ‘moonlighters’, through its new £100bn supercomputer ‘Connect’, which is designed to pursue those whose income and expenditure do not appear to be balanced. Contributor David Redfern, Managing Director of DSR Tax Claims Ltd. 

The UK’s hidden economy, made up of those who do not pay the correct amount of tax on their income, costs the UK over £5bn in revenue each year. This hidden economy is made up of ‘ghosts’ who keep all their income hidden, and ‘moonlighters’ who only declare some of their income to HMRC and keep the rest without paying the tax owed on it. Redfern stated “People might not fully appreciate the problem with tax evasion of this kind, but it takes vital funding away from the UK’s essential services such as the NHS, education and policing. It also means that everyone ends up paying more, whilst damaging legitimate tax-paying businesses by undercutting prices”. Not only are businesses and tradespeople who shirk their full tax responsibilities costing the economy valuable tax income, they also damage other businesses who are unable to price their goods and services as low while ensuring that they pay their full tax bill.

HMRC has a specialist team of investigators, numbered in their hundreds, who are tasked with uncovering tax evasion and recovering those unpaid taxes, including a team of undercover team inspectors. However, HMRC now has a new tool in its arsenal against tax evaders – Connect, a powerful fraud-busting computer which cost £100m to build and collects personal data from a wealth of sources to gain a picture of a taxpayer’s expenditure to compare with their tax return. Redfern explained “Connect brings together nearly 1 billion pieces of data, which can build a complete picture of any individual’s financial life to determine whether they are paying the correct amount of tax compared to the lifestyle they are living so that HMRC can target fraudsters more effectively and investigate those cases where an individual is living a lifestyle well in excess of what his or her tax return suggests they can afford. This allows HMRC to direct its resources efficiently in order to recover much greater amounts of unpaid tax and its data sources are staggeringly wide-ranging, from bank and building society records, both in the UK and abroad, to social media profiles and even Google Earth”. Connect pulls data from a number of sources including the Land Registry, DVLA, VISA and Mastercard records, online trading platforms such as eBay, Airbnb and Gumtree, DWP records, insurance companies and web browsing and email records.

Such wide-ranging data access has led to concerns about HMRC overstepping its powers in relation to taxpayer privacy. Redfern commented “It is essential that HMRC targets those who attempt to evade their tax responsibilities because it harms the UK economy as a whole but such wide-ranging powers of access to people’s personal data need to be handled with care. HMRC needs to be able to ensure complete security of taxpayer’s personal data because it would be a goldmine to criminals if they were able to access such a vast range of personal data. However, HMRC should target taxpayers – both individuals as well as large corporations – and it should become socially unacceptable to attempt to duck one’s tax responsibilities”. People who are concerned that an individual or company is attempting to evade their tax responsibilities can call the confidential HMRC tax evasion line on 0800 788887