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European immigration good or bad for Britain ?

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. Tax evasion isn't worth the risk and undeclared income has to be wasted so it can't be traced.

Wasted? believe me I know a fair few that put it ALL over the bar before they get home! one of the lads I know used to get you to tell his wife he had gone for materials if she rang up for him.

 

KW

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Is this your own opinion or do you have a link with which we can verify this claim?

 

It's my job Scully,and it keeps me busy.Got to get look at the new Connect system last week (been trials since about 2008 but is nearly ready) it can peice together information that used to take us weeks to collect in a couple of minutes. Edited by Davyo

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It's my job Scully,and it keeps me busy.Got to get look at the new Connect system last week (been trials since about 2008 but is nearly ready) it can peice together information that used to take us weeks to collect in a couple of minutes.

ooh lord my previous post was in jest :innocent:

 

 

KW

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It's my job Scully,and it keeps me busy.Got to get look at the new Connect system last week (been trials since about 2008 but is nearly ready) it can peice together information that used to take us weeks to collect in a couple of minutes.

I would agree with you but its not the way I see it, What I see a lot of are people who are unemployed officially but actually working on the side, rather than self employed people doing jobs for cash. Its a lot more common than the statistics would suggest.

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I would agree with you but its not the way I see it, What I see a lot of are people who are unemployed officially but actually working on the side, rather than self employed people doing jobs for cash. Its a lot more common than the statistics would suggest.

 

You are total right mate,but those who employ these people and pay cash in hand should be the main target.

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I don't care what statistics are published - they are merely plucked from thin air. They are laughable.

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It's my job Scully,and it keeps me busy.Got to get look at the new Connect system last week (been trials since about 2008 but is nearly ready) it can peice together information that used to take us weeks to collect in a couple of minutes.

In that case you shouldn't have any problems in providing a link . Whenever you're ready.

Edited by Scully

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In that case you shouldn't have any problems in providing a link . Whenever you're ready.

Just google it,there is plenty of info on it as it's no secret,it's in the public domain.

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I don't care what statistics are published - they are merely plucked from thin air. They are laughable.

I agree with you, Do they really think we are that stupid? Or even more scarey, thats what they really believe...........

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There’s no telling what HMRC will uncover next as it unrolls its most powerful investigations weapon, finds Penny Sukhraj

 

21 Jul 2014

Penny Sukhraj

Penny Sukhraj

Content editor, Accountancy

 

View profile and articles.

 

Related Article

Tax investigations: HMRC's Connect goes further

HMRC's intelligence systems will have a wide impact on the future of taxpayers as the authorities will be able to match travel plans with residency, for example, warns Roy Baldwin, tax investigations expert at Smith & Williamson and a former HMRC tax inspector

17 Dec 2014

It’s no wonder that Mike Hainey speaks about Connect with all the conviction of a new convert, for since its pilot installation in 2008, the data connection tool has helped the taxman secure £3bn in additional tax revenue from £80m initial costs – a 37.5 to 1 return on investment.

 

Connect is HMRC’s strategic risking tool that cross-matches over one billion internal and third-party data items and presents the information as a network of associations.

 

For the first time, HMRC can see the majority of information it has about a taxpayer at the touch of a button. Its use has meant the prevention in loss of £4.1bn in revenue as a result of criminal investigations into taxes and duties owed since April 2010.

 

To Hainey, who leads HMRC’s risk and intelligence service data analytics team, responsible for driving the tax department’s most formidable weapon in its armoury of tax avoidance and evasion weaponry to date, all of the UK is now a network soup of over one billion records, with more than four billion other connections.

 

With 38m personal customers and 4.8m business customers paying tax revenue of some £475.6bn (2011/12) which grows on average 4% per year – considered good by international standards – the UK might seem fairly wealthy.

 

But there remains a £35bn tax gap, which Hainey is most interested in – and the reason the Connect system was set up.

 

The concept of Connect, however, was born several years ago, during the merger of the Inland Revenue and HM Customs and Excise.

 

‘One of the key remits was recognition that when data is brought together from both departments, we can provide a richer picture around our customers and that will lead to better information with which we can service our customers.

 

'We needed something to analyse that data in a more effective way as a key building block required to support the department,’ says Hainey.

 

And Hainey’s appointment to drive the process was no surprise. He was previously with the Ministry of Defence’s law enforcement department, as well as the Serious Fraud Office where he developed the digital forensics unit and was part of the team that created one of the first digital forensics laboratories in the world. And he’s acted as an expert representative on a number of national bodies as well as representing the UK on the G8’s High Tech Crime Sub-Group.

 

Coupling his heavyweight experience with outsourcing the building of Connect to Detica – the international business and technology firm owned by BAE Systems – meant that HMRC’s final offering brought together a ‘big data’ information system that captures and connects vital information around taxpayers using a unique fraud detection platform, allowing the taxman to uncover hidden relationships between people, organisations and data that they could not previously identify.

 

The combination of HMRC’s internal skills with powerful analytics provides insight which significantly improves the effectiveness of its campaigns and compliance case work and provides a rich resource to support analysis of new threats to tax revenue.

 

‘During proof of concept, we selected a single county, put all the data together for the people in that county, and started to do some analytics to get insight. And within probably two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore,’ says Hainey.

 

The new world

 

Connect produced in minutes what previously took months of research or was simply not possible to do manually. HMRC analysts and investigators were able to produce target profiles that could identify a population for investigation and could also more easily spot signs of potential non-compliance, allocate this work to case-workers, through automated feeds and HMRC’s case management system.

 

‘So very quickly the use of the system became operational. There was significant monetary benefit in doing that – tens of millions of pounds in terms of things we were closing down, in terms of fraud, and that underpinned the business case to secure strategic funding to build industrialised capability,’ he says.

 

‘Within two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

HMRC then swiftly moved from the pilot phase into a successful fully operational system. Now investigators use the information to identify the appropriate intervention for the spectrum of behaviours that contribute to the tax gap – ranging from people failing to get things right to people criminally attacking the department, evading, avoidance, hidden economy, legal interpretation (which Hainey explains as ‘playing the legal game’) and some non-payment.

 

‘Our old way was siloed,’ Hainey says, reflecting on the previous modus operandi of HMRC’s investigations and enforcement.

 

‘Much of the data wasn’t joined. Joining was done by the individual, so we had an analyst who would do the best they could, stitching together this data, and if you like, the outcome for the customer in terms of intervention was all down to the skills of this person.

 

‘So if you had someone very talented, you could get good outcomes, dependent on different levels of training. In terms of consistency, it was very difficult. Now obviously with Connect we’re applying a suite of skills on a national basis and applying that profile to the entire UK population if necessary. And applying best expertise to develop those profiles.’

 

Staff review initial results and modify and refine their search criteria in real time to identify categories of high risk. Starting with a mass of data, they filter it and drill down to start enquiries which confirm or reject the suspected fraud or error. Risk Intelligence Services’ remit is to make sense of that data.

 

‘So can we, within the data, identify trends, threats, indicators, or identify customer behaviours, and segment that population in the right way in terms of how we might want to look at that population with a view to providing customer service or intervening, depending on the nature of what we finding?

 

Sweet spot

 

‘The way we achieve that is not just by applying a statistical specialist and analyst, on their own. But what we find as a “sweet spot” is bringing together the technical specialism of the analysts with a tax inspector who knows their particular area of risk and regime and information about customers.

 

‘They know what they’re spotting, together with someone who can handle and manipulate data and understand some of the technology, so we created teams where these three things are brought together as a single team to drive the use of Connect.

 

‘And we get a sweet spot in the middle. Depending on the nature of what we’re looking for, the emphasis will change. The key is to always be driven by the frontline investigator or who understands the customer best and can use the system to steer the analyst to find what they’re looking for,’ Hainey says.

 

Visualisation

 

The most impressive feature is Connect’s visualisation tool which combines the integrated compliance environment (ICE) and the analytical compliance environment (ACE). Hainey demonstrates the tool with names and identifying data removed.

 

Within seconds, the initial data about a particular taxpayer’s self-assessment returns grows into a prolific web of spiders’ legs and Hainey explains that while this initially represented an individual, the picture that is built up indicates a single source for multiple tax returns, with differing identities.

 

‘The real meat underpinning the visual is documents. Here, we have the name of an individual’s self-assessment return. And we notice a bank account. Nothing unusual. But then, there’s more data,’ he enthuses.

 

‘Investigators can click on that and do what we call “spidering” and with a bit more, we find that we’ve connected several self-assessment returns to a single bank account. So the question is why?’

 

Working within the parameters of the data – HMRC uses 30 different sources for this but will not disclose the full listing – means using intelligence gathering abilities to calibrate the system to yield the most productive results. For example, Hainey points to what appears to be three different people, but with slight variations in the spelling of essentially the same surname.

 

‘If you tune it [the system] too tightly – you may miss something. Here we have the same surname, with slight variations in spelling, and each with a slightly different email, and bank accounts differing by one digit. But these are all the same person.

 

‘The investigator understands the customer best and can use the system to steer the analyst to find what they’re looking for

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

‘You can tune the linking to link on two things, and [decide] to be quite soft and fuzzy on how they are matched. The problem is that if you make it too fuzzy then the information just becomes irrelevant. If you tune too tightly, you lose the value of all your intelligence. So if it is perfect, that’s great but none of those records would ever match so this information wouldn’t be linked, therefore we’d have lost the intelligence value of realising this is actually the same person. It’s a constant evolution of tuning the system with all of these different data feeds,’ he says.

 

If an HMRC official is confident of the matches made, they can automate the process of intervention and notices sent. But on occasion human intervention may also be needed to validate the data before intervention. Currently the system is only able to present a month-long view of taxpayers but it will be developed to operate in real time. Hainey says that for now, this is ‘good enough’ for HMRC’s current strategy of identifying populations for intervention downstream. ‘The ambition and strategy going forward is to create a more real time view or move to something as near to real time as we can get,’ he says.

 

Data rich

 

HMRC is considered the most data-rich of all government’s departments, holding information on every person and organisation in the UK from as far back as six to ten years, Hainey says.

 

And it adds to this on a daily basis by virtue of the manner in which it interacts with customers, constantly gathering details and data as simultaneous as the constant inflow of tax returns of all kinds, from every sector.

 

But Connect is not just about an IT system serving as a repository of information especially since HMRC data is also sourced from other legal gatways including international treaties, the purchase of commercial data, gathering information from the internet and even from telephone hotlines where individuals voluntarily disclose information.

 

‘The power of Connect is that we’ve taken that data and made the links – so we’re creating a view of the UK, based on that data – and that is the real power,’ says Hainey.

 

Hot five cases resolved using HMRC Connect

 

Connect has enabled HMRC to identify and prioritise cases in a way that was not possible with previous traditional methods, ensuring that HMRC officers concentrate on the highest value cases.

A customer who was linked to numerous horror film related businesses where transactions were routinely ‘disappearing’ – Connect identified and linked the missing transactions yielding £1m.

A customer who claimed to sell mobility aids but had no stock or records – Connect identified this individual as a ‘front’ for illegal activity, yielding £270,000.

Action was due to be taken against a car dealer for tax evasion, but there were concerns over his ability to pay. Connect confirmed the dealer had significant assets, yielding £170,000.

A claim for capital losses was dismissed when Connect found company assets had been ‘sold’ to a director. His property portfolio also came to light, yielding £260,000.

£26m has been recovered in missing inheritance tax through analysis of individuals claiming their inheritance falls below the £325,000 threshold.

 

 

 

 

 

 

 

 

Related Articles

Tax investigations: HMRC's Connect goes further

 

HMRC's intelligence systems will have a wide impact on the future of taxpayers as the authorities will be able to match travel plans with residency, for example, warns Roy Baldwin, tax investigations expert at Smith & Williamson and a former HMRC tax inspector

 

17 Dec 2014

HMRC outsourcing costs over £77m per month

 

HMRC has revealed it is spending more than £77m a month on outsourced office costs, while the department paid over £800,000 in credit card commission charges in August, according to the latest data on its monthly spending patterns.

 

1 Oct 2014

LDF undisclosed tax scheme yields over £1bn

 

HMRC’s latest statistics show the tax yield from the Liechtenstein Disclosure Facility (LDF) for undeclared offshore liabilities has climbed through the £1bn barrier, but is likely to be well short of delivering the £3bn originally promised by the time the scheme closes next year

 

29 Jan 2015

HMRC admits two thirds of big business facing tax enquiries

 

Two out of three large businesses are the subject of HMRC open enquiries into their tax affairs, according to figures released at the autumn HMRC stakeholder conference yesterday, attended by tax advisers and practitioners.

 

6 Nov 2014

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HMRC investigations: how Connect uses big data

 

There’s no telling what HMRC will uncover next as it unrolls its most powerful investigations weapon, finds Penny Sukhraj

 

21 Jul 2014

Penny Sukhraj

Penny Sukhraj

Content editor, Accountancy

 

View profile and articles.

 

Related Article

Tax investigations: HMRC's Connect goes further

HMRC's intelligence systems will have a wide impact on the future of taxpayers as the authorities will be able to match travel plans with residency, for example, warns Roy Baldwin, tax investigations expert at Smith & Williamson and a former HMRC tax inspector

17 Dec 2014

It’s no wonder that Mike Hainey speaks about Connect with all the conviction of a new convert, for since its pilot installation in 2008, the data connection tool has helped the taxman secure £3bn in additional tax revenue from £80m initial costs – a 37.5 to 1 return on investment.

 

Connect is HMRC’s strategic risking tool that cross-matches over one billion internal and third-party data items and presents the information as a network of associations.

 

For the first time, HMRC can see the majority of information it has about a taxpayer at the touch of a button. Its use has meant the prevention in loss of £4.1bn in revenue as a result of criminal investigations into taxes and duties owed since April 2010.

 

To Hainey, who leads HMRC’s risk and intelligence service data analytics team, responsible for driving the tax department’s most formidable weapon in its armoury of tax avoidance and evasion weaponry to date, all of the UK is now a network soup of over one billion records, with more than four billion other connections.

 

With 38m personal customers and 4.8m business customers paying tax revenue of some £475.6bn (2011/12) which grows on average 4% per year – considered good by international standards – the UK might seem fairly wealthy.

 

But there remains a £35bn tax gap, which Hainey is most interested in – and the reason the Connect system was set up.

 

The concept of Connect, however, was born several years ago, during the merger of the Inland Revenue and HM Customs and Excise.

 

‘One of the key remits was recognition that when data is brought together from both departments, we can provide a richer picture around our customers and that will lead to better information with which we can service our customers.

 

'We needed something to analyse that data in a more effective way as a key building block required to support the department,’ says Hainey.

 

And Hainey’s appointment to drive the process was no surprise. He was previously with the Ministry of Defence’s law enforcement department, as well as the Serious Fraud Office where he developed the digital forensics unit and was part of the team that created one of the first digital forensics laboratories in the world. And he’s acted as an expert representative on a number of national bodies as well as representing the UK on the G8’s High Tech Crime Sub-Group.

 

Coupling his heavyweight experience with outsourcing the building of Connect to Detica – the international business and technology firm owned by BAE Systems – meant that HMRC’s final offering brought together a ‘big data’ information system that captures and connects vital information around taxpayers using a unique fraud detection platform, allowing the taxman to uncover hidden relationships between people, organisations and data that they could not previously identify.

 

The combination of HMRC’s internal skills with powerful analytics provides insight which significantly improves the effectiveness of its campaigns and compliance case work and provides a rich resource to support analysis of new threats to tax revenue.

 

‘During proof of concept, we selected a single county, put all the data together for the people in that county, and started to do some analytics to get insight. And within probably two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore,’ says Hainey.

 

The new world

 

Connect produced in minutes what previously took months of research or was simply not possible to do manually. HMRC analysts and investigators were able to produce target profiles that could identify a population for investigation and could also more easily spot signs of potential non-compliance, allocate this work to case-workers, through automated feeds and HMRC’s case management system.

 

‘So very quickly the use of the system became operational. There was significant monetary benefit in doing that – tens of millions of pounds in terms of things we were closing down, in terms of fraud, and that underpinned the business case to secure strategic funding to build industrialised capability,’ he says.

 

‘Within two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

HMRC then swiftly moved from the pilot phase into a successful fully operational system. Now investigators use the information to identify the appropriate intervention for the spectrum of behaviours that contribute to the tax gap – ranging from people failing to get things right to people criminally attacking the department, evading, avoidance, hidden economy, legal interpretation (which Hainey explains as ‘playing the legal game’) and some non-payment.

 

‘Our old way was siloed,’ Hainey says, reflecting on the previous modus operandi of HMRC’s investigations and enforcement.

 

‘Much of the data wasn’t joined. Joining was done by the individual, so we had an analyst who would do the best they could, stitching together this data, and if you like, the outcome for the customer in terms of intervention was all down to the skills of this person.

 

‘So if you had someone very talented, you could get good outcomes, dependent on different levels of training. In terms of consistency, it was very difficult. Now obviously with Connect we’re applying a suite of skills on a national basis and applying that profile to the entire UK population if necessary. And applying best expertise to develop those profiles.’

 

Staff review initial results and modify and refine their search criteria in real time to identify categories of high risk. Starting with a mass of data, they filter it and drill down to start enquiries which confirm or reject the suspected fraud or error. Risk Intelligence Services’ remit is to make sense of that data.

 

‘So can we, within the data, identify trends, threats, indicators, or identify customer behaviours, and segment that population in the right way in terms of how we might want to look at that population with a view to providing customer service or intervening, depending on the nature of what we finding?

 

Sweet spot

 

‘The way we achieve that is not just by applying a statistical specialist and analyst, on their own. But what we find as a “sweet spot” is bringing together the technical specialism of the analysts with a tax inspector who knows their particular area of risk and regime and information about customers.

 

‘They know what they’re spotting, together with someone who can handle and manipulate data and understand some of the technology, so we created teams where these three things are brought together as a single team to drive the use of Connect.

 

‘And we get a sweet spot in the middle. Depending on the nature of what we’re looking for, the emphasis will change. The key is to always be driven by the frontline investigator or who understands the customer best and can use the system to steer the analyst to find what they’re looking for,’ Hainey says.

 

Visualisation

 

The most impressive feature is Connect’s visualisation tool which combines the integrated compliance environment (ICE) and the analytical compliance environment (ACE). Hainey demonstrates the tool with names and identifying data removed.

 

Within seconds, the initial data about a particular taxpayer’s self-assessment returns grows into a prolific web of spiders’ legs and Hainey explains that while this initially represented an individual, the picture that is built up indicates a single source for multiple tax returns, with differing identities.

 

‘The real meat underpinning the visual is documents. Here, we have the name of an individual’s self-assessment return. And we notice a bank account. Nothing unusual. But then, there’s more data,’ he enthuses.

 

‘Investigators can click on that and do what we call “spidering” and with a bit more, we find that we’ve connected several self-assessment returns to a single bank account. So the question is why?’

 

Working within the parameters of the data – HMRC uses 30 different sources for this but will not disclose the full listing – means using intelligence gathering abilities to calibrate the system to yield the most productive results. For example, Hainey points to what appears to be three different people, but with slight variations in the spelling of essentially the same surname.

 

‘If you tune it [the system] too tightly – you may miss something. Here we have the same surname, with slight variations in spelling, and each with a slightly different email, and bank accounts differing by one digit. But these are all the same person.

 

‘The investigator understands the customer best and can use the system to steer the analyst to find what they’re looking for

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

‘You can tune the linking to link on two things, and [decide] to be quite soft and fuzzy on how they are matched. The problem is that if you make it too fuzzy then the information just becomes irrelevant. If you tune too tightly, you lose the value of all your intelligence. So if it is perfect, that’s great but none of those records would ever match so this information wouldn’t be linked, therefore we’d have lost the intelligence value of realising this is actually the same person. It’s a constant evolution of tuning the system with all of these different data feeds,’ he says.

 

If an HMRC official is confident of the matches made, they can automate the process of intervention and notices sent. But on occasion human intervention may also be needed to validate the data before intervention. Currently the system is only able to present a month-long view of taxpayers but it will be developed to operate in real time. Hainey says that for now, this is ‘good enough’ for HMRC’s current strategy of identifying populations for intervention downstream. ‘The ambition and strategy going forward is to create a more real time view or move to something as near to real time as we can get,’ he says.

 

Data rich

 

HMRC is considered the most data-rich of all government’s departments, holding information on every person and organisation in the UK from as far back as six to ten years, Hainey says.

 

And it adds to this on a daily basis by virtue of the manner in which it interacts with customers, constantly gathering details and data as simultaneous as the constant inflow of tax returns of all kinds, from every sector.

 

But Connect is not just about an IT system serving as a repository of information especially since HMRC data is also sourced from other legal gatways including international treaties, the purchase of commercial data, gathering information from the internet and even from telephone hotlines where individuals voluntarily disclose information.

 

‘The power of Connect is that we’ve taken that data and made the links – so we’re creating a view of the UK, based on that data – and that is the real power,’ says Hainey.

 

- See more at: https://www.accountancylive.com/hmrc-investigations-how-connect-uses-big-data#.dpuf

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HMRC combatting fraud - very novel. Check the skies for flying pigs.

Edited by Gordon R

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You are total right mate,but those who employ these people and pay cash in hand should be the main target.

Thats a circular argument because in places like Wales they call it the rural economy and everybody is at it. The benefits system masks whats really going on because people can hide behind it and nobody questions them about it.

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Impressive as it may look, I'll maybe have a proper read through your post 88 when I've got a bit more time tomorrow Davyo, but in the meantime if you could just highlight the bit that states the number of self employed UK residents who only put 50% of their earnings through their tax returns I'd appreciate it. Cheers.

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There’s no telling what HMRC will uncover next as it unrolls its most powerful investigations weapon, finds Penny Sukhraj

 

21 Jul 2014

Penny Sukhraj

Penny Sukhraj

Content editor, Accountancy

 

View profile and articles.

 

Related Article

Tax investigations: HMRC's Connect goes further

HMRC's intelligence systems will have a wide impact on the future of taxpayers as the authorities will be able to match travel plans with residency, for example, warns Roy Baldwin, tax investigations expert at Smith & Williamson and a former HMRC tax inspector

17 Dec 2014

It’s no wonder that Mike Hainey speaks about Connect with all the conviction of a new convert, for since its pilot installation in 2008, the data connection tool has helped the taxman secure £3bn in additional tax revenue from £80m initial costs – a 37.5 to 1 return on investment.

 

Connect is HMRC’s strategic risking tool that cross-matches over one billion internal and third-party data items and presents the information as a network of associations.

 

For the first time, HMRC can see the majority of information it has about a taxpayer at the touch of a button. Its use has meant the prevention in loss of £4.1bn in revenue as a result of criminal investigations into taxes and duties owed since April 2010.

 

To Hainey, who leads HMRC’s risk and intelligence service data analytics team, responsible for driving the tax department’s most formidable weapon in its armoury of tax avoidance and evasion weaponry to date, all of the UK is now a network soup of over one billion records, with more than four billion other connections.

 

With 38m personal customers and 4.8m business customers paying tax revenue of some £475.6bn (2011/12) which grows on average 4% per year – considered good by international standards – the UK might seem fairly wealthy.

 

But there remains a £35bn tax gap, which Hainey is most interested in – and the reason the Connect system was set up.

 

The concept of Connect, however, was born several years ago, during the merger of the Inland Revenue and HM Customs and Excise.

 

‘One of the key remits was recognition that when data is brought together from both departments, we can provide a richer picture around our customers and that will lead to better information with which we can service our customers.

 

'We needed something to analyse that data in a more effective way as a key building block required to support the department,’ says Hainey.

 

And Hainey’s appointment to drive the process was no surprise. He was previously with the Ministry of Defence’s law enforcement department, as well as the Serious Fraud Office where he developed the digital forensics unit and was part of the team that created one of the first digital forensics laboratories in the world. And he’s acted as an expert representative on a number of national bodies as well as representing the UK on the G8’s High Tech Crime Sub-Group.

 

Coupling his heavyweight experience with outsourcing the building of Connect to Detica – the international business and technology firm owned by BAE Systems – meant that HMRC’s final offering brought together a ‘big data’ information system that captures and connects vital information around taxpayers using a unique fraud detection platform, allowing the taxman to uncover hidden relationships between people, organisations and data that they could not previously identify.

 

The combination of HMRC’s internal skills with powerful analytics provides insight which significantly improves the effectiveness of its campaigns and compliance case work and provides a rich resource to support analysis of new threats to tax revenue.

 

‘During proof of concept, we selected a single county, put all the data together for the people in that county, and started to do some analytics to get insight. And within probably two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore,’ says Hainey.

 

The new world

 

Connect produced in minutes what previously took months of research or was simply not possible to do manually. HMRC analysts and investigators were able to produce target profiles that could identify a population for investigation and could also more easily spot signs of potential non-compliance, allocate this work to case-workers, through automated feeds and HMRC’s case management system.

 

‘So very quickly the use of the system became operational. There was significant monetary benefit in doing that – tens of millions of pounds in terms of things we were closing down, in terms of fraud, and that underpinned the business case to secure strategic funding to build industrialised capability,’ he says.

 

‘Within two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

HMRC then swiftly moved from the pilot phase into a successful fully operational system. Now investigators use the information to identify the appropriate intervention for the spectrum of behaviours that contribute to the tax gap – ranging from people failing to get things right to people criminally attacking the department, evading, avoidance, hidden economy, legal interpretation (which Hainey explains as ‘playing the legal game’) and some non-payment.

 

‘Our old way was siloed,’ Hainey says, reflecting on the previous modus operandi of HMRC’s investigations and enforcement.

 

‘Much of the data wasn’t joined. Joining was done by the individual, so we had an analyst who would do the best they could, stitching together this data, and if you like, the outcome for the customer in terms of intervention was all down to the skills of this person.

 

‘So if you had someone very talented, you could get good outcomes, dependent on different levels of training. In terms of consistency, it was very difficult. Now obviously with Connect we’re applying a suite of skills on a national basis and applying that profile to the entire UK population if necessary. And applying best expertise to develop those profiles.’

 

Staff review initial results and modify and refine their search criteria in real time to identify categories of high risk. Starting with a mass of data, they filter it and drill down to start enquiries which confirm or reject the suspected fraud or error. Risk Intelligence Services’ remit is to make sense of that data.

 

‘So can we, within the data, identify trends, threats, indicators, or identify customer behaviours, and segment that population in the right way in terms of how we might want to look at that population with a view to providing customer service or intervening, depending on the nature of what we finding?

 

Sweet spot

 

‘The way we achieve that is not just by applying a statistical specialist and analyst, on their own. But what we find as a “sweet spot” is bringing together the technical specialism of the analysts with a tax inspector who knows their particular area of risk and regime and information about customers.

 

‘They know what they’re spotting, together with someone who can handle and manipulate data and understand some of the technology, so we created teams where these three things are brought together as a single team to drive the use of Connect.

 

‘And we get a sweet spot in the middle. Depending on the nature of what we’re looking for, the emphasis will change. The key is to always be driven by the frontline investigator or who understands the customer best and can use the system to steer the analyst to find what they’re looking for,’ Hainey says.

 

Visualisation

 

The most impressive feature is Connect’s visualisation tool which combines the integrated compliance environment (ICE) and the analytical compliance environment (ACE). Hainey demonstrates the tool with names and identifying data removed.

 

Within seconds, the initial data about a particular taxpayer’s self-assessment returns grows into a prolific web of spiders’ legs and Hainey explains that while this initially represented an individual, the picture that is built up indicates a single source for multiple tax returns, with differing identities.

 

‘The real meat underpinning the visual is documents. Here, we have the name of an individual’s self-assessment return. And we notice a bank account. Nothing unusual. But then, there’s more data,’ he enthuses.

 

‘Investigators can click on that and do what we call “spidering” and with a bit more, we find that we’ve connected several self-assessment returns to a single bank account. So the question is why?’

 

Working within the parameters of the data – HMRC uses 30 different sources for this but will not disclose the full listing – means using intelligence gathering abilities to calibrate the system to yield the most productive results. For example, Hainey points to what appears to be three different people, but with slight variations in the spelling of essentially the same surname.

 

‘If you tune it [the system] too tightly – you may miss something. Here we have the same surname, with slight variations in spelling, and each with a slightly different email, and bank accounts differing by one digit. But these are all the same person.

 

‘The investigator understands the customer best and can use the system to steer the analyst to find what they’re looking for

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

‘You can tune the linking to link on two things, and [decide] to be quite soft and fuzzy on how they are matched. The problem is that if you make it too fuzzy then the information just becomes irrelevant. If you tune too tightly, you lose the value of all your intelligence. So if it is perfect, that’s great but none of those records would ever match so this information wouldn’t be linked, therefore we’d have lost the intelligence value of realising this is actually the same person. It’s a constant evolution of tuning the system with all of these different data feeds,’ he says.

 

If an HMRC official is confident of the matches made, they can automate the process of intervention and notices sent. But on occasion human intervention may also be needed to validate the data before intervention. Currently the system is only able to present a month-long view of taxpayers but it will be developed to operate in real time. Hainey says that for now, this is ‘good enough’ for HMRC’s current strategy of identifying populations for intervention downstream. ‘The ambition and strategy going forward is to create a more real time view or move to something as near to real time as we can get,’ he says.

 

Data rich

 

HMRC is considered the most data-rich of all government’s departments, holding information on every person and organisation in the UK from as far back as six to ten years, Hainey says.

 

And it adds to this on a daily basis by virtue of the manner in which it interacts with customers, constantly gathering details and data as simultaneous as the constant inflow of tax returns of all kinds, from every sector.

 

But Connect is not just about an IT system serving as a repository of information especially since HMRC data is also sourced from other legal gatways including international treaties, the purchase of commercial data, gathering information from the internet and even from telephone hotlines where individuals voluntarily disclose information.

 

‘The power of Connect is that we’ve taken that data and made the links – so we’re creating a view of the UK, based on that data – and that is the real power,’ says Hainey.

 

Hot five cases resolved using HMRC Connect

 

Connect has enabled HMRC to identify and prioritise cases in a way that was not possible with previous traditional methods, ensuring that HMRC officers concentrate on the highest value cases.

A customer who was linked to numerous horror film related businesses where transactions were routinely ‘disappearing’ – Connect identified and linked the missing transactions yielding £1m.

A customer who claimed to sell mobility aids but had no stock or records – Connect identified this individual as a ‘front’ for illegal activity, yielding £270,000.

Action was due to be taken against a car dealer for tax evasion, but there were concerns over his ability to pay. Connect confirmed the dealer had significant assets, yielding £170,000.

A claim for capital losses was dismissed when Connect found company assets had been ‘sold’ to a director. His property portfolio also came to light, yielding £260,000.

£26m has been recovered in missing inheritance tax through analysis of individuals claiming their inheritance falls below the £325,000 threshold.

 

 

 

 

 

 

 

 

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9 Jun 2015

HMRC investigations: how Connect uses big data

 

There’s no telling what HMRC will uncover next as it unrolls its most powerful investigations weapon, finds Penny Sukhraj

 

21 Jul 2014

Penny Sukhraj

Penny Sukhraj

Content editor, Accountancy

 

View profile and articles.

 

Related Article

Tax investigations: HMRC's Connect goes further

HMRC's intelligence systems will have a wide impact on the future of taxpayers as the authorities will be able to match travel plans with residency, for example, warns Roy Baldwin, tax investigations expert at Smith & Williamson and a former HMRC tax inspector

17 Dec 2014

It’s no wonder that Mike Hainey speaks about Connect with all the conviction of a new convert, for since its pilot installation in 2008, the data connection tool has helped the taxman secure £3bn in additional tax revenue from £80m initial costs – a 37.5 to 1 return on investment.

 

Connect is HMRC’s strategic risking tool that cross-matches over one billion internal and third-party data items and presents the information as a network of associations.

 

For the first time, HMRC can see the majority of information it has about a taxpayer at the touch of a button. Its use has meant the prevention in loss of £4.1bn in revenue as a result of criminal investigations into taxes and duties owed since April 2010.

 

To Hainey, who leads HMRC’s risk and intelligence service data analytics team, responsible for driving the tax department’s most formidable weapon in its armoury of tax avoidance and evasion weaponry to date, all of the UK is now a network soup of over one billion records, with more than four billion other connections.

 

With 38m personal customers and 4.8m business customers paying tax revenue of some £475.6bn (2011/12) which grows on average 4% per year – considered good by international standards – the UK might seem fairly wealthy.

 

But there remains a £35bn tax gap, which Hainey is most interested in – and the reason the Connect system was set up.

 

The concept of Connect, however, was born several years ago, during the merger of the Inland Revenue and HM Customs and Excise.

 

‘One of the key remits was recognition that when data is brought together from both departments, we can provide a richer picture around our customers and that will lead to better information with which we can service our customers.

 

'We needed something to analyse that data in a more effective way as a key building block required to support the department,’ says Hainey.

 

And Hainey’s appointment to drive the process was no surprise. He was previously with the Ministry of Defence’s law enforcement department, as well as the Serious Fraud Office where he developed the digital forensics unit and was part of the team that created one of the first digital forensics laboratories in the world. And he’s acted as an expert representative on a number of national bodies as well as representing the UK on the G8’s High Tech Crime Sub-Group.

 

Coupling his heavyweight experience with outsourcing the building of Connect to Detica – the international business and technology firm owned by BAE Systems – meant that HMRC’s final offering brought together a ‘big data’ information system that captures and connects vital information around taxpayers using a unique fraud detection platform, allowing the taxman to uncover hidden relationships between people, organisations and data that they could not previously identify.

 

The combination of HMRC’s internal skills with powerful analytics provides insight which significantly improves the effectiveness of its campaigns and compliance case work and provides a rich resource to support analysis of new threats to tax revenue.

 

‘During proof of concept, we selected a single county, put all the data together for the people in that county, and started to do some analytics to get insight. And within probably two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore,’ says Hainey.

 

The new world

 

Connect produced in minutes what previously took months of research or was simply not possible to do manually. HMRC analysts and investigators were able to produce target profiles that could identify a population for investigation and could also more easily spot signs of potential non-compliance, allocate this work to case-workers, through automated feeds and HMRC’s case management system.

 

‘So very quickly the use of the system became operational. There was significant monetary benefit in doing that – tens of millions of pounds in terms of things we were closing down, in terms of fraud, and that underpinned the business case to secure strategic funding to build industrialised capability,’ he says.

 

‘Within two to three weeks of the pilot, we were uncovering very serious criminal attacks on HMRC – things we couldn’t ignore

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

HMRC then swiftly moved from the pilot phase into a successful fully operational system. Now investigators use the information to identify the appropriate intervention for the spectrum of behaviours that contribute to the tax gap – ranging from people failing to get things right to people criminally attacking the department, evading, avoidance, hidden economy, legal interpretation (which Hainey explains as ‘playing the legal game’) and some non-payment.

 

‘Our old way was siloed,’ Hainey says, reflecting on the previous modus operandi of HMRC’s investigations and enforcement.

 

‘Much of the data wasn’t joined. Joining was done by the individual, so we had an analyst who would do the best they could, stitching together this data, and if you like, the outcome for the customer in terms of intervention was all down to the skills of this person.

 

‘So if you had someone very talented, you could get good outcomes, dependent on different levels of training. In terms of consistency, it was very difficult. Now obviously with Connect we’re applying a suite of skills on a national basis and applying that profile to the entire UK population if necessary. And applying best expertise to develop those profiles.’

 

Staff review initial results and modify and refine their search criteria in real time to identify categories of high risk. Starting with a mass of data, they filter it and drill down to start enquiries which confirm or reject the suspected fraud or error. Risk Intelligence Services’ remit is to make sense of that data.

 

‘So can we, within the data, identify trends, threats, indicators, or identify customer behaviours, and segment that population in the right way in terms of how we might want to look at that population with a view to providing customer service or intervening, depending on the nature of what we finding?

 

Sweet spot

 

‘The way we achieve that is not just by applying a statistical specialist and analyst, on their own. But what we find as a “sweet spot” is bringing together the technical specialism of the analysts with a tax inspector who knows their particular area of risk and regime and information about customers.

 

‘They know what they’re spotting, together with someone who can handle and manipulate data and understand some of the technology, so we created teams where these three things are brought together as a single team to drive the use of Connect.

 

‘And we get a sweet spot in the middle. Depending on the nature of what we’re looking for, the emphasis will change. The key is to always be driven by the frontline investigator or who understands the customer best and can use the system to steer the analyst to find what they’re looking for,’ Hainey says.

 

Visualisation

 

The most impressive feature is Connect’s visualisation tool which combines the integrated compliance environment (ICE) and the analytical compliance environment (ACE). Hainey demonstrates the tool with names and identifying data removed.

 

Within seconds, the initial data about a particular taxpayer’s self-assessment returns grows into a prolific web of spiders’ legs and Hainey explains that while this initially represented an individual, the picture that is built up indicates a single source for multiple tax returns, with differing identities.

 

‘The real meat underpinning the visual is documents. Here, we have the name of an individual’s self-assessment return. And we notice a bank account. Nothing unusual. But then, there’s more data,’ he enthuses.

 

‘Investigators can click on that and do what we call “spidering” and with a bit more, we find that we’ve connected several self-assessment returns to a single bank account. So the question is why?’

 

Working within the parameters of the data – HMRC uses 30 different sources for this but will not disclose the full listing – means using intelligence gathering abilities to calibrate the system to yield the most productive results. For example, Hainey points to what appears to be three different people, but with slight variations in the spelling of essentially the same surname.

 

‘If you tune it [the system] too tightly – you may miss something. Here we have the same surname, with slight variations in spelling, and each with a slightly different email, and bank accounts differing by one digit. But these are all the same person.

 

‘The investigator understands the customer best and can use the system to steer the analyst to find what they’re looking for

 

Mike Hainey, head of risk and intelligence service data analytics team, HMRC

‘You can tune the linking to link on two things, and [decide] to be quite soft and fuzzy on how they are matched. The problem is that if you make it too fuzzy then the information just becomes irrelevant. If you tune too tightly, you lose the value of all your intelligence. So if it is perfect, that’s great but none of those records would ever match so this information wouldn’t be linked, therefore we’d have lost the intelligence value of realising this is actually the same person. It’s a constant evolution of tuning the system with all of these different data feeds,’ he says.

 

If an HMRC official is confident of the matches made, they can automate the process of intervention and notices sent. But on occasion human intervention may also be needed to validate the data before intervention. Currently the system is only able to present a month-long view of taxpayers but it will be developed to operate in real time. Hainey says that for now, this is ‘good enough’ for HMRC’s current strategy of identifying populations for intervention downstream. ‘The ambition and strategy going forward is to create a more real time view or move to something as near to real time as we can get,’ he says.

 

Data rich

 

HMRC is considered the most data-rich of all government’s departments, holding information on every person and organisation in the UK from as far back as six to ten years, Hainey says.

 

And it adds to this on a daily basis by virtue of the manner in which it interacts with customers, constantly gathering details and data as simultaneous as the constant inflow of tax returns of all kinds, from every sector.

 

But Connect is not just about an IT system serving as a repository of information especially since HMRC data is also sourced from other legal gatways including international treaties, the purchase of commercial data, gathering information from the internet and even from telephone hotlines where individuals voluntarily disclose information.

 

‘The power of Connect is that we’ve taken that data and made the links – so we’re creating a view of the UK, based on that data – and that is the real power,’ says Hainey.

 

- See more at: https://www.accountancylive.com/hmrc-investigations-how-connect-uses-big-data#.dpuf

Well, I read the VAT portion of that- it was too taxing for me.

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Impressive as it may look, I'll maybe have a proper read through your post 88 when I've got a bit more time tomorrow Davyo, but in the meantime if you could just highlight the bit that states the number of self employed UK residents who only put 50% of their earnings through their tax returns I'd appreciate it. Cheers.

 

There is no bit that states the number,what I saiid was you would be surprised how many I see and deal with on a weekly basis.The point I was making was imigrants (sorry a minority)are not the only burden on the UK.Our own have been bleeding the system long before the immigration issue . Edited by Davyo

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I am an immigrant and pay my full wack of taxes.

 

some comments on here are "interesting" I think my contribution to the UK is far higher than my "cost" .... In my case, and to answer the OP, a good thing for the UK

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I am an immigrant and pay my full wack of taxes.

 

some comments on here are "interesting" I think my contribution to the UK is far higher than my "cost" .... In my case, and to answer the OP, a good thing for the UK

Yes but are you one of the scary eastern European types that are definitely in a crime gang and will eat your granny or a good immigrant that will cook you a paella or give you brie? I'm pretty sure tax from slavic types actually destroys our home grown tax anyway, so you have to be careful....

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There is no bit that states the number,what I saiid was you would be surprised how many I see and deal with on a weekly basis.The point I was making was imigrants (sorry a minority)are not the only burden on the UK.Our own have been bleeding the system long before the immigration issue .

No, that's not what you said, but possibly that's what you meant. But without the figures to prove it it's just your opinion. I wouldn't necessarily make a point of pursuing it but I'm self-employed you see. :)

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Been a terrible thing for me personally over the last 10 years... My wife is from Slovakia originally.. (only joking sweetheart!)

 

Seriously though it is a problem that these girls come over here and steal all our attractive, intelligent, witty - not to mention modest men. :innocent:

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I've been working with this Polish immigrant recently, she pays all her taxes (and lots of them as she has a great job) and makes the UK a better place. She is bringing contracts to UK companies that may well have gone to the US previously.

 

idphoto_bampw_borderless_zpsgffavcho.jpg

 

I have absolutely no complaints.

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