HMRC now holds 55 billion items of taxpayers' data as it bids to tackle tax evasion
Posted on in Business News , Cycles News
It has been reported by This Is Money that HMRC now holds 55 billion items of taxpayers' data, including email and bank records, as it cracks down on tax avoidance. The data is held on its AI-driven 'Connect' system, which was launched to tackle the growing tax gap, according to tax investigation insurance experts PfP.
The tax gap is the difference between the tax that should be paid and the amount HMRC collects and last year the figure stood at £32 billion.
HMRC introduced its Connect system in 2010 to narrow this gap by using data to identify potential cases of tax evasion and avoidance and is used by HMRC to select individuals or businesses for further investigation.
The aim is to speed up the process of detecting and fraud and evasion by cross-referencing business's and people's tax records with other databases. It looks at everything from property ownership data from the Land Registry to overseas bank accounts and investment accounts.
The Connect system also looks at social media posts, bank and credit card records, DVLA records, social media posts, and most concerningly of all, HMRC will sweep your browsing history and email records too. PfP says this database has now grown to 6100 gigabytes of taxpayer data.
HMRC has been under pressure to recoup tax revenue after parliament's spending watchdog revealed a sharp fall in investigations over the pandemic cost the Government £9billion.
In December, the National Audit Office said HMRC had investigated around 30% fewer compliance cases between 2020 and 2021 compared with the previous year.
But now there are concerns that HMRC's blanket approach to collecting the data through its AI system means innocent individuals are coming under the taxman's investigations.
Kevin Igoe, managing director of PfP told This Is Money: 'Connect is now at the core of HMRC's tax investigations.
'It allows HMRC to analyse billions of data points to pinpoint taxpayers for closer scrutiny.
'It's an incredibly complex and intelligent computer system. However, the system can easily produce "false positives" and trigger investigations into innocent individuals and businesses.
'Due to the "automatic" nature of the Connect system, innocent taxpayers can end up under investigation through no fault of their own.'
A HMRC spokesperson told This Is Money: 'Connect is a powerful analytical tool that we have used since 2010, which has helped make us a world leader in using data and insight to inform and manage risk.
'The Connect system is not the sole deciding factor in beginning or deciding the direction of a tax investigation.
'Other factors are also considered and human insight always makes the final judgement.'
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