HMRC To Use ‘Web Robots’ To Hunt Down Tax Cheats

Tax cheats beware: HM Revenue & Customs is planning to use web bots to crack down on tax evasion

HM Revenue & Customs (HMRC) is extending its campaign against tax cheats with the news that it will use ‘web robots’ to trawl cyberspace.

The announcement from the HMRC says that it will utilise “web robot” software to search the internet and find targeted information about specified people and companies. HMRC also says that by using the software it can more accurately pinpoint people who have failed to pay the right tax.

But it seems that the government software will also be used to locate people who are trading without informing HMRC.

Bots On The Prowl

The web robot software (essentially Internet bots) will be used in conjunction with the department’s Connect computer system.

“Connect alerts HMRC to previously invisible tax evasion by matching a vast amount of HMRC and third-party data, enabling a fast and focused response to tax evasion,” said HMRC. “It shines a light onto previously hidden relationships, uncovering anomalies between such elements as bank interest, property income and lifestyle indicators before homing in on unexplained inconsistencies.”

“By being open about our areas of interest for the coming year we hope to maximise that exchange of information and ensure we reduce the tax gap and help customers pay what they owe,” said Wells, HMRC’s Director of Risk and Intelligence.

“We will use the information we gather to pursue people who choose not to use the opportunities we provide for them to put their affairs in order on the best possible terms,” said Wells. “It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”

Moonlighting Clampdown

The decision to target cyberspace to hunt down those evading tax comes as HMRC continues its campaign to recover around £7 billion lost to the Treasury each year. It is thought that this latest development, the use of ‘web robots’, will help HMRC track down rogue eBay and Gumtree businesses, as well as people earning second incomes by acting as private tutors. It will also help it hunt down so called cash-in-hand handymen and traders.

A HMRC spokesman told the Guardian newspaper for example that the software will be used to look on services such as Google and eBay to identify traders, and will then cross-reference it against its own systems.

“For example, it will see if Mr Smith’s sale of mobile phones is a trade,” the spokesman said. “If, when it looks back into our systems and finds that Mr Smith works at a supermarket and there is no mention of online trading, the compliance staff will contact him.

“It’s about catching moonlighters. We want to let these people know that we are on to them,” he told the Guardian.

Connect Success

However before designing and launching this and other campaigns, the department will seek input from interested parties.

In September last year the department’s new Connect computer system helped HMRC discover that millions of people had been taxed incorrectly between 2008 and 2010. Those people faced either a tax rebate or a demand to make up underpaid income tax.

In January this year security specialist Webroot warned that UK citizens who were in a hurry to file their tax returns before the 31 January deadline, were in danger of falling for email phishing scams.