Can HMRC see if you are receiving a second income?
Meet George. George is a retired accountant who hangs out at the members bar at his local Golf Course. People know he used to be an accountant, so they always come to him for advice. Unfortunately, George may be a little rusty when it comes to the latest tax legislation and information.
This week he had a particularly outlandish claim to share with everyone down at the pub, namely that HMRC has no way of seeing whether you are receiving a second income. Unfortunately for everyone this isn’t true, so we decided to set George straight and clarify a few things. And trust us, when you find out how many tricks HMRC have up their sleeves, you’ll think twice before not sorting your taxes out properly!
The HMRC Spy Network
It actually turns out that HMRC probably have more information on you than they’d like you to know and more importantly, are using a vast network of data collection tools to get a holistic picture of your income streams and business ventures. Think of them as a strange mix between a 24/7 tax investigator and an incredibly resourceful online stalker.
For example, I bet you didn’t know that they actually have a dedicated computer system called ‘Connect,’ which was designed by a defence contractor. It sifts through a variety of networks, from your social media to loans, bank accounts, employment information, online shopping, and other databases like land registry. Scary, right?
They also have an enormous pool of third party database which, at first glance, seem completely unrelated to taxes. However, in conjunction with all the other data, it becomes an immense web of interconnected bits of information that give a scarily accurate picture of your income and expenses. It results in 22 billion lines of data which, when printed on paper, is equal to 3 times the circumference of the earth’s surface. And that’s just HMRC…
Even though it costs nearly £45 million pounds, HMRC may be more than a little smug about it all, as it has resulted in more than £4 billion of extra tax income from all the hardworking average Joe’s out there.
Unfortunately, this means that George is more than a little off the mark. Back in his day, it might have been a bit easier for taxes to go undeclared, but nowadays, with the wealth of data HMRC has at its disposal, it becomes harder and harder to go under the radar. In conclusion, it has never been as important to have your tax affairs in order, because sooner or later, you can bet your bottom dollar that the tax man will find out!
Everyone will come across someone like “George” – for some people it’s a parent who worked in finance years ago, or a neighbour who ran a business back in the day, or it may indeed just be a man in the pub! They always mean well, but their advice can be seriously or dangerously wrong, so it’s always best to consult a specialist to make sure you get the right information. Get in touch with us for any tax questions or issues, and we’ll make sure to keep you on the right side of the law.