HMRC to use social media to identify tax evaders

13 Sep 2018

HM Revenue & Customs (HMRC) has warned that it will "observe, monitor, record and retain internet data", including blogs and social networking sites where no privacy settings have been applied, to track down tax evaders.

The guidance on criminal investigations for tax offences also mentions other ‘open source’ internet sources which HMRC will monitor such as news reports, internet sites, Companies House and land registry records.

"The guidance confirms what we already know – that HMRC plugs huge amounts of data into its state of the art 'Connect' computer system to identify those who may not be paying the tax they should," said Steven Porter of law firm Pinsent Masons.

HMRC has also started going through land registry records, identifying and sending ‘nudge’ letters to people who have sold a second home but not declared a profit in their tax return. These letters are intended to act as a prompt, giving taxpayers an opportunity to explain why they are not subject to tax or to pay the outstanding tax.

“In stating specifically that HMRC will look at information on the internet, HMRC is making sure that such intelligence work will be classed as ‘overt’ and not ‘covert’ surveillance, which means that HMRC does not have to get specific authorisation to do it,” Mr Porter says.

“However, it also serves the dual purpose of reminding those with undeclared income or gains that there is a good chance that the tax authorities will catch up with them. Whilst criminal prosecution cannot be ruled out in cases of tax evasion, it is much less likely for those who come clean with HMRC and offer to settle their outstanding liabilities.

“As well as significantly reducing the risk of criminal prosecution, approaching HMRC before they catch up with you, should mean lower penalties.”

The guidance shows that a criminal investigation is also likely where when using an avoidance scheme, reliance is placed on a false or altered document or such reliance or material facts are misrepresented to enhance the credibility of a scheme.

Mr Porter says that the clock is ticking and time is running out for those with underpaid tax involving offshore matters to regularise their affairs without being exposed to severe new penalties.

HMRC has sent warning letters urging those with “overseas income or gains, including investments and accounts” to declare them before 30 September 2018 to avoid paying higher tax penalties.

At Beavis Morgan, our diverse team of tax professionals are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.

If you are unsure whether they have undeclared UK tax liabilities that involve offshore matters or transfers, get in touch with us today. Our tax specialists will review your affairs and, if necessary, rectify any discrepancies before you become liable to the new ‘failure to correct’ penalties that will come into force on 1 October 2018.

In turn, if you are concerned about a tax enquiry into your affairs, worried that you may have possibly under-declared or, worse still, are you already under enquiry, our tax specialists, some of whom are former HMRC Inspector of Taxes, are well versed in dealing with all types of tax issues. We are also readily available to oversee HMRC disputes on your behalf, as well as to represent clients in appeal proceedings before the Tax Tribunal. In certain situations, we can also offer professional fee protection insurance, so the costs are covered in whole or in part.

For more information, and to make sure you don’t pay more tax than you legally need to, contact Paul Attridge or your usual Beavis Morgan Partner.