HMRC have told us they are committed to increasing the use of Big Data to identify targets for tax investigations.

PFP, the experts in tax investigation insurance, hosted the annual UK tax investigations conference last month, at which Gill Aitken, the most senior lawyer at HMRC, has said that she expects Big Data usage to increase substantially over the next few years.

The improved use of Big Data comes as a response to recent growing pressure to increase the number of successful tax investigations.

By 2020, HMRC will have moved to a fully digital tax system. Through using sources that include information obtained through new digital tax returns, the Revenue is employing more ways in which it can identify taxpayers who are underpaying on their returns.

We can expect other sources such as data revealed by the Revenue’s ‘Connect’ database, data from the Common Reporting Standard, and information from the Panama Papers scandal to play their part in revealing tax avoidance suspects to HMRC.

HMRC’s recent drive to make tax digital was centred around making returns easier to get right for taxpayers, and generally simplifying the process for taxpayers, accountants, and HMRC. The simpler process also provides HMRC with more accurate information, and therefore makes it easier for the Revenue to start an investigation.

As you can imagine, HMRC investigations can be extremely costly to the taxpayer, as well as stressful if you’ve made a genuine mistake.

What is worrying for the taxpayer is that HMRC is constantly using new ways to investigate more people it suspects of underpaying tax. Taxpayers therefore must take extra care to ensure their tax affairs are in order.

With HMRC exploring more and more avenues to collect tax returns, the likelihood of inconsistencies appearing increases, as does the chance of innocent taxpayers being investigated.

As Big Data’s importance continues to rise within HMRC, more taxpayers are looking to protect themselves against the threat of investigation.

To find out more on how we can help protect you against the cost of most tax investigations please contact us.

Telephone: 01223 832477