THE Government has made it clear that it intends to clamp down on tax evasion and has increased the resources within Her Majesty’s Revenue & Customs dedicated to achieving this aim.

One recent announcement that caught my eye related to a new HMRC computer program called Connect.

Connect does exactly what the name suggests – it trawls through information and makes connections.

Currently it has access to more than one billion items of data.

One area targeted with Connect is inheritance tax.

Apparently two-thirds of the IHT returns filed show estates below the taxable threshold but by using Connect to link information held by the department on property ownership and transactions, company ownership, loans, bank accounts, employment history and self-assessment records HMRC has found IHT under-declarations of £26million in just one year.

Connect has also been used to uncover fraudulent VAT claims and offshore evasion.

In total it has produced £1.4billion in additional tax so far.

It is a very impressive tool and HMRC is becoming highly adept at using it.

This intelligence-led approach – in a recent case HMRC also used the dates and times of cash point and debit card transactions to disprove a taxpayer’s claim to have been non-resident – is now becoming standard practice in tax investigations.

While HMRC is using such information to ferret out tax fraud, it has also been encouraging those who have not complied with their tax obligations to regularise matters through a series of amnesties.

Where people have not come forward under the amnesties HMRC has shown no hesitation in opening criminal investigations – 18 followed the recent plumbers’ amnesty and two individuals are now serving prison sentences.

In short, the Government’s commitment to crack down on evasion is no idle threat.

The methods being used are becoming more sophisticated by the day and the action HMRC is prepared to take against defaulters is designed to send a clear and very public message.

HMRC now has powers to name and shame and to keep deliberate defaulters under scrutiny until they have proved that they have mended their ways.

If your affairs are in order you should have absolutely nothing to fear.

If they are not, the sooner the situation is rectified the better.

Taking the risk that HMRC will not find out is a course I would definitely not recommend.

*PAUL APLIN OBE is a tax partner with A.C. Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty. He and Taunton-based tax partner Amanda Gunter can be contacted on 01823-624450, Bridgwater-based tax partner Paul Kingdom can be contacted on 01278-446088.