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Each year HMRC initiates tax investigations into the affairs of individuals, businesses, companies, not for profit organisations and trusts. Only a small proportion of these investigations are opened on a purely random basis. The vast majority are selected for a tax investigation because, after being risk assessed,

The Tax Inspector has access to a wide range of information and will base their risk assessment on a number of different factors. These could include:

• third party information e.g. bank or building society interest received, mortgages and

loans taken out

• property information from Stamp Duty Land Tax Returns and the Land Registry

• malicious and anonymous information provided by informers

• a critical analysis of the accounts of a business or company showing things like low profit, low drawings or remuneration, high levels of expenditure etc

HMRC is also now using software known as Connect, which draws a huge amount of data not only from Government sources, but other open sources such as Facebook and Ebay, and identifies connections or patterns in the data. It is immensely powerful. For example, it will reveal all properties listed in the name of the taxpayer and those listed as living in those properties who are claiming housing benefit.

Ensure that HMRC do not ‘Connect’ with you by coming forward with a voluntary disclosure through Lindsay and saving sums on penalty charges !