The way HMRC checks up on taxpayers has changed dramatically over the past decade. It’s no longer just about the odd brown envelope arriving in the post — technology and data-sharing now give HMRC unprecedented reach.
With Chancellor Rachel Reeves pushing HMRC to recover an additional £7.5 billion a year in unpaid tax by 2029, the message is clear: compliance is under the spotlight like never before. But what does that actually mean for you, your business, or even your side hustle?
Connect: HMRC’s Supercomputer
HMRC’s Connect software quietly pulls together information from more than 30 different sources. That includes the DVLA, Land Registry, banks, credit agencies, and even online property listings. It compares this with your tax returns to look for gaps or inconsistencies.
For example, if your Zoopla ad shows a rental property but your tax return doesn’t, expect Connect to flag it. It’s a reminder that accuracy and transparency are key.
Direct Access to Bank Data
Since 2021, HMRC no longer needs your permission to look at your bank information. By issuing a Financial Institution Notice, it can compel banks, pension providers, and investment companies to share your data. You will be told if this happens, but the power now lies firmly with HMRC.
Selling Online? HMRC Is Watching
If you’re using platforms like eBay, Vinted, Airbnb, or AutoTrader, keep in mind that these now share seller data with HMRC. It isn’t about the odd clear-out — it’s aimed at people who are effectively trading.
If you earn more than £1,000 a year this way, you’ll need to declare it. That threshold rises to £3,000 in 2027, but until then, casual sellers who are consistently earning should take note.
Social Media as Evidence
It might sound dramatic, but your Instagram feed can be evidence. HMRC openly admits to monitoring public online posts to see if lifestyles match declared incomes. Recently, it confirmed that AI now plays a role in investigating suspected tax evasion cases.
Traditional Detective Work Still Exists
Not everything is digital. Investigators can still carry out site visits or even check Google Street View for signs of wealth — from luxury cars on driveways to home improvements that don’t match reported income.
Informants and Rewards
In 2024–25, HMRC received a record 164,000 tip-offs about suspected tax evasion. It paid out more than £850,000 in rewards, and it’s considering a US-style system where whistleblowers could earn a percentage of the tax recovered.
Global Data Sharing
The days of quietly hiding money offshore are gone. Over 100 countries, including known tax havens, now share account and investment data with HMRC. If you have overseas interests, they are very likely visible to the taxman.
What This Means for You
For most people, this shouldn’t be a cause for panic. The reality is that HMRC is using technology to make sure the right tax is being paid, not to chase those selling the occasional item online.
But for business owners, landlords, and anyone with multiple income streams, it’s important to make sure everything is declared correctly. HMRC’s powers mean mistakes are more easily spotted — and ignoring them can be costly.
At OnPoint Accounting, we believe in keeping things simple, clear, and compliant. Whether it’s managing a side business, rental property, or your main company accounts, our team ensures your tax affairs are in order so you don’t need to worry about unexpected scrutiny.
If you’re unsure whether you’re reporting everything correctly, now is the perfect time to review your position. Get in touch with us today and let’s make sure your tax is watertight.