Tax Investigations Surge: HMRC’s Connect Tool

HMRC’s Connect Tool Raises £4.6bn in Just One Year as Tax Investigations Surge

HMRC’s powerful data analysis tool, Connect, has raised an additional £4.6bn in the 2024/25 tax year alone. This translates to a 35% jump on its previous annual average of £3.4bn, according to data released under a Freedom of Information request by Pinsent Masons.

Connect, launched in 2010, pulls data from numerous sources, including third-party and merchant acquirer data, to help HMRC identify patterns and links that would otherwise go unnoticed. Crucially, it does not access browser histories, emails, or monitor social media. Around 4,300 HMRC staff now use Connect as a core part of their compliance toolkit, leading to 540,000 tax investigations in just one year.

This comes at a time when tackling tax avoidance is high on the government’s agenda. The Labour government has set an ambitious target of raising an additional £5bn annually through compliance measures by 2027. Connect will be central to this effort.

Although not explicitly referenced, it’s difficult to overlook the potential impact of the surge in HMRC’s ‘nudge letters‘, designed to prompt taxpayers to disclose income HMRC believes may have been omitted, on the overall increase in tax raised.

Tax Fee Protection Service

Nonetheless, the sheer increase in HMRC tax investigations highlights the importance of taxpayers having fee protection cover in place. We offer this protection via our provider Vantage. This Tax Fee Protection Service offers to cover the professional fees incurred in responding to HMRC enquiries. The cost of dealing with HMRC investigations can be substantial and is not included in our standard fees.

We strongly recommend that all clients consider joining this service for peace of mind. For more information, please speak to your local Whitings LLP office or your usual Whitings LLP contact.

Disclaimer - All information in this post was correct at time of writing.