Digging For Data
A recent article in the Financial Times highlighted the extent to which Her Majesty’s Revenue and Customs (HMRC) is now trawling UK citizens data to fill the “tax gap” (the difference between the amount of tax that is theoretically to be paid to HMRC, and what is actually paid).
In the UK the overall tax gap was £31 billion or 4.7% of the total tax liabilities in the 2018/2019 year.
This is a huge sum of money and well worth a significant investment in technology and legislative changes in order to diminish that gap.
The Financial Times reports as follows:
HMRC’s website lists the following as sources of third-party data:
- Employers when they provide information for income tax and national insurance purposes
- Other government departments and public authorities
- Credit reference agencies
- Banks and other financial institutions
- Public sources
- People you do business with
- Your agent or representative
- Overseas tax authorities
Tax experts told Financial Times about other data likely to have been used, including:
- Credit and debit card transactions
- DVLA records
- Travel records
- Passport information
- Land Registry reports on property
- Social media
The Office of Tax Simplification has suggested HMRC should in future gather third-party data from:
- Investment and wealth managers including on dividends and equalisation payments, reportable income, interest and chargeable gains
- Gift aid payments to charities”
The Australian Taxation Office (ATO) is no different from its counterparts overseas and in some respects is ahead in this data collection management processes and is similarly looking to close the tax gap in Australia.
The ATO reports that the tax gap in the 2017/2018 year (pictured right) at $31 billion which is 7% of the total tax that it would like to have collected if everyone was fully compliant with tax law.
(Australian Taxation office, 2021)
Act Early
If you think that you may be the subject of an adverse tax audit then best to get on the front foot. Our expert team at Barrett Walker of lawyers and accountants can assess your exposure and provide you with options.