HMRC property raids reduce by 30% through use of AI and big data

HMRC property raids reduce by 30% through use of AI and big data

HMRC is leveraging sophisticated algorithms and big data sources to gather evidence with greater ease and efficiency than property raids

HMRC property raids reduce by 30% through use of AI and big data

HMRC’s use of AI and big data to gather evidence in tax investigations has led to a 30% drop in property raids, according to law firm Pinsent Masons.

The firm explained that HMRC has leveraged sophisticated algorithms and big data sources to gather evidence with greater ease and efficiency than costly and time-consuming property raids.

Steven Porter, Partner at Pinsent Masons, said: “HMRC’s big brother-style data collection on taxpayers is giving it the material it needs to ramp up its tax investigations and at the same time, is reducing the need for it to actually raid properties.”

The figure has dropped from 669 property raids in 2016/17 to 471 last year.

In particular, tax inspectors have been using the state-of-the-art Connect database, an analytical system worth £80m and designed by BAE Systems, to carry out preliminary investigative work within seconds.

Connect collates data from various public and private sources, ranging from banks to social media, and sophisticated algorithms can cross-reference data with tax records to flag up individuals or businesses to investigate.

HMRC has also expanded its scope for identifying tax evasion through the Common Reporting Standard, under which it currently receives large amounts of financial data about UK residents with offshore bank accounts from the Channel Islands, BVI and Bermuda.  Later this year the taxman will also start receiving data from Switzerland and the UAE.

Porter added: “HMRC is increasingly developing new and more efficient ways to collect data on taxpayers as it looks to meet its higher, tougher targets for investigations and prosecutions.”

“Falling numbers of property raids by no means indicates a drop-off in activity. HMRC’s growing emphasis on data collection means it now has increasingly large pool of information from which to draw on when launching future investigations.”

HMRC has begun utilising AI in various areas, such as for analysing the accuracy of tax returns and automating roughly ten million routine processes by the end of 2018.

Last week the Revenue joined J5, an international coalition aimed at tackling international tax crime, money laundering and threats posed by cryptocurrencies.

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

1m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

2m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

3m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

3m

Related Articles

Restaurants and takeaways make up a quarter of HMRC's named and shamed tax defaulters

HMRC Restaurants and takeaways make up a quarter of HMRC's named and shamed tax defaulters

1w Beth McLoughlin, Managing Editor
HMRC applied to shut down 4,160 businesses in 2018

HMRC HMRC applied to shut down 4,160 businesses in 2018

1m Emanuela Hawker, Reporter
Are HMRC’s Accelerated Payment Notices proof of the taxman’s aggression?

HMRC Are HMRC’s Accelerated Payment Notices proof of the taxman’s aggression?

1m Emanuela Hawker, Reporter
HMRC retrospective loan charge causing problems for contractors

HMRC HMRC retrospective loan charge causing problems for contractors

1m Emanuela Hawker, Reporter
Friction between HMRC and the taxpayer as the number of tribunal disputes continues to rise

HMRC Friction between HMRC and the taxpayer as the number of tribunal disputes continues to rise

2m Emanuela Hawker, Reporter
Property taxation is under increasing scrutiny

HMRC Property taxation is under increasing scrutiny

2m Emanuela Hawker, Reporter
HMRC putting increasing pressure on accountants and lawyers

HMRC HMRC putting increasing pressure on accountants and lawyers

2m Emanuela Hawker, Reporter
HMRC's Profit Diversion Compliance Facility: what do businesses need to know?

HMRC HMRC's Profit Diversion Compliance Facility: what do businesses need to know?

2m Pinsent Masons, Jason Collins and Catherine Robins (partners)