Big Brother is watching, and I am not referring to the Channel 5 programme! The term originated from a warning that appears on posters throughout Oceania, the fictional dictatorship described by George Orwell in his book ‘Nineteen Eighty-Four’. Now, in 2017, the tools are available to allow all sorts of organisations to correlate information about us.
You may recall the furore surrounding the alleged ‘hacking’ of the US presidential election a couple of months ago. Whilst such so-called state sponsored activities are perhaps the latest propaganda tool, we should not underestimate the power of the Internet, and the ability of all sorts of organisations to look at our digital footprint. Search engines have been doing this for years, constantly becoming more sophisticated in their analytics. For example, our shopping habits are scrutinised to help marketeers sell more of what we want, or may want!
The latest organisation to harness the power of the internet is HM Revenue & Customs (HMRC), who have spent several years and a significant amount of money on systems designed to identify those who may have paid too little tax. Leading up to the latest tax return filing deadline of 31 January 2017, the system was fully deployed for the first time.
Some of the sources from which HMRC currently obtain information are:
Visa and Mastercard transactions: Anonymised information on all your payments can be supplied to HMRC, who can then seek details of transactions for its investigations.
Land Registry records: To determine properties purchased, and stamp duty paid.
DVLA: Details of cars purchased and owned by individuals.
UK and overseas bank accounts: From this year, HMRC receive information from banks located in more than 60 countries.
Internal tax documents: Systems show council tax paid, VAT registrations, previous tax investigations, previous year’s tax return, or highlights where one has not been filed.
Earnings: From all employers, including those you have worked for casually, or on an ad hoc basis. This includes any company benefits received. HMRC can also access child benefit and maintenance payments through the Child Support Agency.
Online marketplaces: Websites such as eBay and Gumtree can be accessed to identify regular traders.
Social media: The system can also look at public social media account information, including Twitter, Facebook and Instagram.
Web browsing and email records: HMRC will be able to access individual’s digital information.
Consequently, instead of relying solely on information provided by taxpayers via their returns, HMRC’s powerful “Connect” system can draw on information from a myriad of sources to create a profile of each taxpayer’s total income. Where this varies from the information provided by the taxpayer, the account is flagged and could be subject to further investigation.
Prior to the tax return deadline, HMRC sent letters to 10,000 individuals who had submitted their 2014-15 tax return without a complete declaration of savings interest received. HMRC said it had used information gathered from banks, peer-to-peer lenders such as Zopa and other financial institutions and then checked it against individuals’ tax returns. It sent letters to those with discrepancies. A spokesman said: “We have written to customers who appear to have under-declared untaxed interest.”
As of September last year, HMRC can now get information from banks and financial organisations in British overseas territories, such as the Channel Islands, while from this year, it can gather this information from 60 more countries. The system gains anonymised information on all Visa and Mastercard transactions, enabling it to identify areas of likely underpayments which it can then target further, seeking details of individuals’ transactions where necessary.
Via access to Land Registry records, HMRC can see houses purchased and sold, and ensure the correct tax has been paid. From there, further sources enable it to determine if properties are being rented out and whether that income has been declared. HMRC is also able to determine if someone is likely to be able to afford such properties, or whether they are suspected of having used previously undeclared income or savings.
The Connect system’s data-hoarding does not stop at the income people have received from work and investment. The system crunches data from sources such as eBay and Airbnb, the rental platform. A spokesperson from Airbnb said: “Airbnb hosts want to pay their fair share of tax and we want to help. We remind hosts to check and follow tax rules, send email reminders during tax season and have downloadable transaction histories for hosts. We also include helpful information on our responsible hosting page.”
HMRC will also be one of the government bodies to gain access to information under new laws known commonly as the “snoopers’ charter”. The legislation means telecom providers store customers’ web browsing and email records for at least a year; which can then be accessed by the Government.
Whilst these new measures may make you feel slightly uncomfortable, it should not be cause for alarm. The new systems should make the process of returning your tax details easier, and are really aimed at those that deliberately under-declare their income.
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