What does HMRC know about your life? Introducing CONNECT

The most recent and sophisticated weapon in HMRC’s digital armoury is their state of the art system CONNECT. CONNECT was designed by BAE Systems and has been operating since 2010.  This powerful system contains over a billion records including taxpayer files, information from third parties and from the internet.  It includes interest on bank accounts, business ownership details and information from overseas tax authorities.  The system pools the information from various departments of HMRC and combines it with information from other government databases such as Companies House, DVLA, the land registry and the electoral roll.  There’s also talk of it being able to track travel in and out of the UK!

People also share incredibly revealing information via social media that they may think nothing of at the time but which reveals details of their lifestyle, whereabouts and activities.  HMRC can access this information, without leaving any trace and use it to build a picture of what someone’s financial and tax affairs should look like.

CONNECT is capable of trawling almost unimaginable amounts of data to find tax potentially at risk.  Once an incredibly time consuming task, tax officers can now instantly access information on what taxpayers have in their back garden and what they tweeted when they were on holiday (while claiming to be on business).

HMRC have spent £80m on this system and the investment looks to have been worthwhile. Since its inception, it has helped to secure an additional £3bn of tax revenues – a good return by any standards.

The importance of CONNECT in HMRC’s compliance programme is reflected by the fact that, in 2011/12, 62% of enquiry case selections were generated by CONNECT. This rose to 77% in 2012/13 and the target for 2013/14 was 83%.

Whilst the sophistication of the system may bring fears of a ‘big brother’ world, the benefits to society shouldn’t be forgotten.  Fewer taxpayers are likely to be victims of inadequately informed challenges from HMRC, causing them untold anxiety and disruption to their business.  In addition the Treasury is benefitting from the additional tax raised from people who had not been paying the correct amount of tax.  It should also help crack down on illegal tax fraud.

So, next time you post a status update on Facebook or Twitter remember that it may not be just your friends that are watching.  HMRC’s electronic eye may not be all-seeing, but it sees far more than many people imagine.

If you have any concerns over an HMRC enquiry, or wish to protect yourself from the costs of an enquiry, then click here to get in touch or call Alan Ross, Tax Director, on 01628 770770.