You will have no doubt heard of HMRC’s plans to digitise the tax system (probably mostly from us!). As this will affect everybody, it’s important to know the impact the following could have on you. 

HMRC have a little-talked-about-but-extremely-powerful-computer system called Connect. Introduced in 2009 Connect is a state of the art analytical system which collates and assesses information about a taxpayer from a number of sources (including information from offshore). Gone are the days of HMRC investigators undertaking weeks and months of preliminary work before starting an enquiry, Connect does all the prep work in a fraction of the time.

HMRC invested over £80m on the system in 2009 and, since then further investment has been made bringing the total spend to over £100m. The spending was worth it for them though and since its inception, it has helped to secure an additional £3bn in tax revenues.

Needless to say, HMRC are continuing to develop and improve the capabilities of Connect. Already it gathers data from wide ranging sources; Companies House, Banks (both onshore and offshore), the Land registry, the DVLA, the Benefits agency…the list goes on. It also collates information from your online footprint including social media platforms, Airbnb, Google maps and EBAY.

The software “maps” the taxpayer’s footprint and uses this to spot anomalies either because of error (e.g. bank interest has been omitted by accident) or because of trends which don’t add up (tax return shows low earnings but properties of significant value being purchased). They can then use this data to trigger an enquiry.

So, with Making Tax Digital looming it is worth considering – what does your digital footprint look like to HMRC?

By introducing Making Tax Digital HMRC will, by 2020, receive quarterly results for all businesses, allowing them to massively increase the amount of information they have on each business and taxpayer. The scope for opening an enquiry will surge so it is important to get your house in order now. Making sure that the information you pass to HMRC is accurate will reduce the risk of anomalies being spotted by the super computer.

What are the first steps you need to take?

  • Talk to us today about solutions to improve the quality of your data and what steps you can take to reduce the risk of enquiry.

  • Switch to online cloud accounting software (if you haven’t already!)

Be ahead of the change. Tax is going digital whether you like it or not and HMRC will be expecting businesses to spend the next two years getting ready. It’s imperative that you start to make the changes to a compatible software ahead of time. Thousands of businesses are abandoning SAGE ahead of this change because the new subscription-based software simply cannot compete when it comes to compatibility and cost.

What are your alternatives? We’re running a free event on the 27th September to discuss the changes that are about to happen and what your choices are. If you would like to reserve a space for yourself – book here.

  • Have a chat with our Cloud Accounting Team to make the most out of your chosen software. 

We won’t just encourage you to switch and then leave you in the dark! Get yourself or your team trained on the software of your choice. We want to make sure you’re sending information to HMRC that is of the right standard so that you’re not exposing yourself to a risk of a tax enquiry. There are also 500+ time-saving apps that connect with cloud software such as Xero – we have our recommendations, but can also help you to find and work with some excellent industry specific apps.







Give our Cloud Accounting Team a call on 01474 853856 or email us at to see how you can tailor your software to get the most out of your business. 



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