HMRC's 'Big Data' System Connect Generates Record £4.6bn in Additional Tax
HM Revenue & Customs' (HMRC) 'big data' system, Connect, has generated a significant £4.6bn in additional tax for the 2024-25 financial year, using its connections to various data sources. This substantial amount is a notable part of the estimated £46.8bn tax gap for the same period. Connect's success is built on its ability to harvest data from various sources, including banks, financial institutions, online marketplaces, and property lettings databases, using these connections to build networks and identify patterns, aiding tax enforcement. The system's effectiveness is clear, with an average additional annual yield of £3.4bn over several years, and a 35% increase in the most recent year. However, it's important to note that human insight plays a crucial role in initiating tax investigations based on Connect's search results. Despite Connect's success, HMRC faces challenges. The House of Commons public accounts committee has criticized the department for lacking an overview of wealthy individuals' total wealth, and estimates of the 'wealthy tax gap' and 'offshore tax gap' are considered inaccurate. HMRC continues to refine its data sources, with the £4.6bn collected by Connect being a substantial step towards bridging the tax gap.
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