HMRC trawls Web for tax cheats

HM Revenue & Customs is using highly sophisticated data mining tools to crawl the Internet for evidence of individuals and companies evading tax.
The system will integrate data collected from websites with HMRC’s Connect system, which compares tax records with third party information sources to discover incidents of tax evasion.
The technology will support four forthcoming campaigns by HMRC. These will target ‘VAT rulebreakers’, individuals offering paid training without paying tax, untaxed online markets and traders.
“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 HMRC director of risk and intelligence, Mike Wells. “It will be more expensive if we come and find people, so I urge them to come forward and disclose voluntarily.”
Connect is based on a system called NetReveal from BAE Systems’ IT security subsidiary Detica. According to a departmental report in 2009, the system uncovered VAT repayment fraud worth £330m in its first year of use.
The move comes after the Cabinet Office reported that a new system for analysing tax credit applications, developed by Fujitsu, saved HMRC almost £11m in six months.
The Fraud & Error Assessment Tool (Feast) is used by the taskforce, part of HMRC to analyse tax credit applications for evidence of fraudulent claims.
The Cabinet Office report said that HMRC now plans to roll Feast out more widely, expecting to save £256m over the next four years.