• Lin Homer addressing PfP's Tax Investigation conference today
• HMRC plans to work more closely with tax agents and intermediaries
Lin Homer, Chief executive of HMRC, will say today that the Revenue's enforcement work will make greater use of real time data, in a speech at the annual tax investigation conference organised by PfP, the experts in tax investigation insurance.
Real time data systems used by HMRC include:
• HMRC's £45 million database system called 'Connect' gathers real time data to help identify groups where underpayment of tax is a problem
• Real Time Information (RTI), which was introduced in April 2013 and meant that employers had to start reporting PAYE information electronically every time an employee is paid, rather than just once a year
PfP explains that the Connect database helps HMRC to identify individual suspects who may have underpaid their tax. To do this, it draws data from multiple public and private sources, including: banks, local councils, the Driver & Vehicles Licensing Agency, land registry, online sales records, and even social media.
PfP says that the use of data from banks allows HMRC to keep track of an individual's savings and spending, or a business's sales and investments. If these are out of kilter with the income or profits stated on their tax-returns, it raises a red flag to the Revenue.
"Data analytics are at the heart of our ground breaking Connect system which brings together over a billion pieces of data. Connect gives our people the real time insights they need to tackle non compliance and has contributed to this year's record breaking compliance yield of £23.9 bn."
PfP explains that by using Real Time Information (RTI) HMRC can monitor payroll tax more closely looking for both errors in the operation of PAYE and any possible tax evasion.
Kevin Igoe, Managing Director of PfP, comments: "A greater use of the real-time data will give HMRC more leads to investigate and allow it to act swiftly to combat tax evasion more effectively."
In Lin Homer's keynote speech she will also say that:
• HMRC intends to work more closely with agents and intermediaries to provide a better overall customer service
• HMRC will continue to improve its digital services in order to develop the overall customer experience and help improve access to information
• There is a growing need for new digital and analytical compliance skills to effectively monitor and reduce tax evasion
• HMRC will continue to provide face-to-face services, despite improving its overall digital service
Kevin Igoe comments: "We are delighted that Lin Homer is able to join us at the PFP tax conference. A good working relationship between HMRC and tax agents is essential to the effectiveness of the taxation system. Both parties need to be able to work closely together and open lines of communication such as attendance at our conference is a good sign of HMRC's desire to be more open with agents. It is vital that both sides understand the other's viewpoint."