Tax warning over social networking sites

The taxman could soon be looking at social networking sites to research the
lives of taxpayers, according to tax specialists CCH Fee Protection.

The move could see the tax authorities scanning individual’s online entries
to assess whether there are any undeclared earnings.

HM Revenue & Custom’s Irish counterpart has already started to browse
social networking websites. ‘Although there have been no disclosed cases yet in
the UK, it is just a matter of time before HMRC starts to use this new
technique,’ Peter Horgan, Managing Director of CCH Fee Protection, believes.

Individuals tempted to inflate their business interests on professional
networking websites such as LinkedIn, or talk up their personal wealth by
exhibiting their new luxury car or boat on Facebook, should think twice as this
could spur investigations by the tax authorities, CCH said.

‘Online data like this could lead tax inspectors to make assumptions about
your earnings and lifestyle. If this impression doesn’t tally with the income
you report to HMRC it is likely that you will get investigated. CCH Fee
Protection is already aware that HMRC looks at local newspapers and media
databases to build up a profile of individuals it is targeting, so it is
inevitable that it will look to the internet as an additional source of
information,’ Horgan said.

The taxman already uses a wide range of date to drum up new leads, including
a ‘web robot’ which scans auction websites and other data. The NAO has also
suggested it could do more.

A spokeswoman for HMRC said: ‘We use a number of methods to find out about
people who should be paying but are not. The hidden economy deprives the UK
economy of vital funding.’

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