- Tax Disputes and Risk Management Director
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HMRC has revealed that there are now 55 billion items of data relating to taxpayers in its ‘Connect’ AI system, which it uses to target taxpayers for tax investigations.
HMRC’s ‘Connect’ is an AI system that uses data from a wide range of sources to identify potential cases of tax evasion and avoidance. It is used by HMRC to select individuals and businesses for further tax investigations. The database has now grown to 6100 gigabytes of taxpayer data.
Connect allows HMRC to quickly analyse information that would previously have required a huge amount of time and human resources.
Examples of what Connect can do:
The system gets data from numerous sources, including:
The development of the system was driven by HMRC’s determination to close the ‘tax gap’ – the difference between the amount of tax that should be paid to HMRC in theory and the amount of tax that HMRC actually receives. Last year the tax gap stood at £32 billion.
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.
Tax investigations can be very stressful and costly for those involved which is why we run a Tax Investigation Service to help protect clients against the professional costs involved in a tax investigation or enquiry. This service is backed by an insurance policy we have taken out in our own name.
Joining our Tax Investigation Service provides peace of mind knowing we are here to help you when HMRC come calling. Our service will pay our professional fees that result from most types of HMRC enquiries or full investigation.
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