HMRC is intensifying its crackdown on unpaid tax, with its data analysis system Connect driving a surge in investigations and prosecutions. The tax authority helped secure or protect approximately £10 billion during the last financial year, according to reports.
Connect System Drives 540,000 Investigations
Connect, HMRC's data analysis system, cross-checks information from banks, social media platforms, online marketplaces, and tax returns. This led to 540,000 investigations during the 2024/25 year, law firm Pinsent Masons said. Ian Robotham, partner at the firm, stated: "The algorithms that it uses allow HMRC to spot anomalies that would otherwise go unnoticed by the human eye."
Rising Prosecutions and Convictions
Ian Dickinson, tax director at UHY Hacker Young, warned: "HMRC seems increasingly willing to prosecute individuals who evade tax." The authority's Fraud Investigation Service recorded 260 convictions against the most serious tax evaders during the 2025 to 2026 year, reflecting the heightened enforcement.
Whistleblower Rewards Scheme Bolstered
HMRC is also expanding its network of informants by enhancing its rewards scheme. Whistleblowers who provide information leading to over £1.5 million being retrieved receive between 15% and 30% of the extra tax collected. In the last financial year, individuals reporting their neighbours, colleagues, and friends were handed a total of £1.4 million after a record number of tip-offs, according to government data.
Future Impact of US-Style System
Hinesh Shah of Pinsent Masons commented: "We're expecting that the number and quality of whistleblower reports to HMRC will increase dramatically under the new reward systems - which is based on the US system. In the US, $123.5 million was given to tax whistleblowers as rewards in the most recent year for which data is available. If HMRC starts issuing individual awards that go into the millions of pounds then that is going to lead to a radical change in behaviour."
