The software, called Connect, has been developed to scour vast databanks of personal and commercial information, seeking to unearth links between individual taxpayers and businesses, income, assets and transactions. It then matches its findings against the information the taxpayer has provided through their return. Discrepancies are flagged and could prompt a tax investigation. The searches take mere seconds and are undertaken repeatedly to capture new information.
From next year Connect’s powers will extend further still. September 2016 is when HMRC starts having access to files held by banks and other financial firms based in British overseas territories, such as the Channel Islands; and from 2017 Connect goes truly global with access to data in a further 60 countries.
One of Connect’s biggest jobs is to hunt for income disparities. It will process information about your bank account balances and income, and match this with other information – mainly your tax return and, for example, and your PAYE data submitted by your employer. The object is to spot undeclared, taxable savings income. From 2016 financial institutions in British Overseas Territories will share data with HMRC. From 2017, this extends to 60 other OECD countries and by 2020 virtually all countries will have some form of data-sharing agreement in place.
In theory the data should always flow to the country where the individual is resident for tax purposes. So HMRC would share data with another country only if the individual was due to pay tax there. In turn, HMRC would want bank account data from say, Spain, where it related to taxpaying residents in the UK.
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Much has happened since I last put pen to paper in the immediate aftermath of the referendum result and I thought it sensible to comment on some of the issues which are emerging from the ‘swirling fog’ that we experiencing. July 24th 2016, reminded me of September 12th 2001 in New York, with people walking around in shock, confused at the attack on the political and economic system. To be angry at the shock of the unexpected result and how that might affect everyone’s life is a natural and rational response, however much it might seem otherwise. Last week I wrote that the result was not a disaster and the financial system was capable of absorbing this shock, in short, my view has not changed.
Originally launched by the UK Government as the Post Office Savings Bank in 1861, the NS&I provided the opportunity for both the public to save and as the government to fund the deficit. To encourage post war saving in 1956, Premium Savings Bonds were introduced – but not without some political and religious opposition. Despite the resistance, NS&I has since evolved into one the largest savings organisations in the UK and has approximately 25 million customers and more than £179 billion invested.