Not only does the system collate data connected with an individual's national insurance number, but it also cross-references with online marketplaces such as eBay, property websites, insurance firms, and Companies House - and it even knows if you've paid your council tax.
"When the Revenue is looking at your annual tax return each year, it can compare that information with the information from the Connect system," McCaffrey said. "That enables it to form a profile of the taxpayer, as to the kind of lifestyle that taxpayer enjoys and the assets they hold, and it compares that with the drawings or the salary on the tax return." McCaffrey explained that signals of a high-cost lifestyle coupled with low declared income would make a "recipe for being chosen for an HMRC inquiry", stressing the importance of ensuring returns are completed correctly and accurately. "Plainly, that is how inquiries are being chosen currently," he said. "It is a very cost-effective way for HMRC to access all of this information, and it means that tax investigations are now more focused, more relevant and have more rigour." McCaffrey also explained that when an investigation does take place, it is now carried out by a specialist investigator with detailed knowledge of the industry rather than a local tax office employee. It is also likely to be all-encompassing rather than narrowing in on a specific area of a business's finances.Farmers warned HMRC software to target investigations at those suspected of under-declaring
