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.
If you have any doubts about your financial affairs we are here to give you free, impartial, independent advice. If you have any questions or need any clarification regarding the above you can contact me on info@blacktowerfm.com
If you work for yourself and do not take sufficient steps to invest for later life, you risk an uncertain financial future and may even court the possibility of running out of money at some point in your retirement.
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