Collection of taxes

¿How does HMRC gather data on UK taxpayers?

HMRC as department of the UK government responsible for the collection of taxes, is always on the lookout for non-compliant taxpayers, wherever they may be in the world, and uses various means to achieve this objective.

Like the police, HMRC may have a sixth sense for such matters and follow their nose from an insignificant beginning. Sometimes they need only the smallest amount of information to act upon - as little as a mobile number, even with no name and address.

If you are an expat living in Spain with outstanding UK tax issues, then do not assume that HMRC don’t have the means to find out information about you, your business and your assets.

How does HMRC do this?

They use their software called CONNECT. Having had the software demonstrated to me, it is impressive. And it is still being expanded to achieve more and more.

It can take months of work for HMRC to build a case, especially if the starting point is a mobile phone number. However, a breakthrough in progress can come at any time. By using other complementary investigative software, previously unseen links can be established. One thing leads to another, then another.

How HMRC uses AI in tax investigations

In the UK, HMRC regularly uses AI to gather data and build a case. AI is being used to:

  • Decide who to investigate.
  • Monitor UK taxpayers.
  • Predicting behaviour.
  • Decide when to investigate.

What data does HMRC hold?

HMRC holds data from a wide variety of sources including:

  • Data that is put on a tax return by a taxpayer, as: Personal data, income, gains.
  • Third party data, as: Financial institutions (banks, credit card companies), Land registry, Companies house, Driver & Vehicle Licencing Agency (DVLA), Social media, Flight & passenger information (Border Agency) and ‘Well-wishers’ who report people.
  • Periodic Work In Progress Reports.
 

Is the tax investigation on a civil or criminal basis?

Either way, it can change in an instant. Most UK taxpayers would prefer any matter to be handled on a civil basis. But the choice is for HMRC to decide based on the supporting evidence.

The longer the matter is left unresolved, arguably, the more evidence that can be established.

The merits of making a Disclosure to HMRC

It is possible that HMRC has not yet committed itself one way or the other. So, a timely Disclosure may be the best way forward.

I accept that in this brief article, we have gone from an isolated mobile phone number to making a Disclosure in short order. However, in our experience, that is how HMRC can also work. Why commit to the cost of a criminal investigation lasting years that may or may not succeed in a conviction?

If you have outstanding UK tax issues needing help and advice on dealing with HMRC, handling a tax investigation or making a disclosure, contact us by phone or email. Any initial video consultation is free.

info@mercuryabogados.com

Telephone: +34 951 052 811

Whatsapp: +34 643 89 04 96

Mercury Abogados works in partnership with Paul Malin, an professional with experience for over 30 years, Paul has assisted UK taxpayers in resolving their tax investigations and disputes. Paul is now a self-employed consultant, but his career has included working for top accountancy firms, including EY, Grant Thornton and Haines Watts.

Paul helps taxpayers under any form of tax investigation. To date, he has assisted numerous taxpayers in resolving their UK tax issues. This can be a taxpayer who is an individual, partner, company, settlor or beneficiary of trusts. The taxes involved can be either direct taxes (such as income tax and corporation tax) or indirect taxes (VAT, import duties, etc.)