TaxPersonal TaxTechnology leaves evaders with “no hiding place”

Technology leaves evaders with "no hiding place"

New software tools have improved HMRC's targeting of tax evasion, advisors have said

ADVANCES IN TECHNOLOGY available to the taxman means there is “no hiding place” for tax evaders, advisors have said.

HM Revenue & Customs yesterday announced that it would be tackling VAT defaulters, private tutors, including personal trainers, and online sellers as part of its next clampdown on tax evasion. It was able to do this, it said, because of new “cutting-edge tools” such as “web robot” software to search the internet and find targeted information.

Its Connect system also allows HMRC to match its own information with third party data. This helps inspectors “shine a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies”, HMRC said.

Chas Roy-Chowdhury, head of tax at ACCA, said this targeting would not have been possible a few years ago.

“This is pretty wide range of areas they are looking at,” he said. “People that think they can hide are wrong. There is an online footprint so traders and other evaders need to own up.”

Gary Ashford, director of tax investigations at RSM Tenon, said that there was a fear that genuine mistakes could be caught by the taxman.

“HMRC have a range of sources of evidence available to them and we assume that they have been doing their homework so they can target their anti-evasion efforts,” he said. “Careful targeting is needed as the one fear with this initiative is that those who make genuine mistakes over their tax affairs might be caught up in this drive. Such people need help, either from HMRC or from properly-qualified tax advisers.”

John Cassidy, tax investigations partner at PKF, said: “The deterrent should be effective because there is no hiding place for evaders. HMRC will use software to monitor transactions and officers can then follow up using information on account holders received from the marketplaces themselves. In effect, HM Revenue & Customs is saying: ‘you will get caught so you might as well come clean now’.”

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