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Labour’s Tax Blitz: Rachel Reeves Deploys Surveillance Tech to Target UK Earners.H

Chancellor Rachel Reeves is now hammering taxpayers on two fronts. First, by hiking taxes and second, by cracking down on those who try to avoid them.

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Chancellor Rachel Reeves is hiring 5,000 new tax investigators to clamp down on evasion (Image: Getty)

Tax crime prosecutions have hit a three-year high as HMRC adopts a more aggressive approach to compliance. It opened 93,000 investigations in the three months to September 30, up from the recent quarterly average of 78,000.

They’re likely to climb much higher as Labour declares open warfare on tax evasion and avoidance.

HMRC is launching a “more aggressive compliance push” with Reeves committing an extra £1.4billion to hire 5,000 extra tax investigators in the Budget, said Ian Robotham, legal director at international law firm Pinsent Masons. “These extra resources will see HMRC deliver more investigations and more prosecutions for tax fraud.”

He warned: “More funding means more investigators, more cases opened, more interviews, more evidence-gathering and, ultimately, more prosecutions.”

HMRC fears a surge in evasion and avoidance as taxpayers rebel against Budget plans to slap inheritance tax on farmers, businesses and unused pensions, said Neela Chauhan, partner at accountancy group UHY Hacker Young.

“Taxpayers really resent paying tax on their inheritances. But with IHT being such a major earner for the Treasury, HMRC has a strong incentive to challenge suspicious submissions.”

The fact that IHT is charged at a punitive 40% on eligible estates will also tempt more people to chance their arm. Stick to legal means like gifting rather than illegal ones.

Families must get their sums right as HMRC will swoop on errors, Chauhan said. “It’s more important than ever to undertake accurate estate planning and valuations to avoid getting caught in HMRC’s crosshairs.”

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Chauhah said HMRC is increasingly investigating IHT underpayments using resources like the Land Registry and Google Street View.

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“It also uses data from the Trust Register Service (TRS) – which all trusts must comply with – to correctly value estates.”

HMRC paid more than £500,000 to whistleblowers and informants last year, and this is likely to continue rising.

The taxman’s ultimate weapon is supercomputer HMRC Connect. It holds 55 billion items of data on taxpayers, and that’s growing all the time. It now incorporates artificial intelligence (AI) technology in its systems.

The robots are coming for your tax return.

HMRC Connect has all of your tax returns and can compare your previous submissions against your latest one, to see if anything looks amiss.

It also processes data from every other government agency, including the DVLA, Department for Work and Pensions, Land Registry, Border Agency, Companies House, electoral roll and council tax records.

HMRC Connect grabs information from your bank and building society, debit and credit cards, credit reference agencies, crypto asset platforms and insurers.

It can track down your earnings data, including income from casual employers and company benefits.

It even holds child benefit and maintenance payments data and will cross-reference the lot. And the taxman doesn’t stop there.

HMRC Connect is all over social media too.

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HMRC can access public posts on Facebook, LinkedIn, Twitter and Instagram, although only as part of an ongoing investigation. It can also source your web browsing and email records.

So if you show off your fancy new car on Facebook, or post glitzy pictures of your luxury trip to the Caribbean, this may raise questions if your reported income is modest.

If you buy and sell goods online for more than £1,000 a year, report that, too. In January, HMRC secured new powers to check all your trading activity on platforms such as eBay, Gumtree, Etsy and Vinty.

HMRC even has access to property sites such as Airbnb, to see if you’re renting out rooms. It keeps a beady eye on buy-to-let landlords, too.

If you’re thinking of slipping money offshore think again, as tax collectors share data globally under the common reporting standard.

Criminal tax investigations bring in nearly £1billion in a year. The cost pays for itself around 30 times over.

It reckons it can bring in another £5.5billion.

While 81% of evasion is by small businesses, notably takeaways and sweet shops, it’s coming after personal taxpayers too.

We now pay more tax than ever but resist the temptation to break the law. You’re free to moan about taxes as much as you like but if you want to avoid them, do it legally. Otherwise HMRC could come after you.

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