HMRC Connect tool brings in record £4.6bn in unpaid tax

Sara White, Editor, Business & Accountancy Daily - Croner-i

All powerful data analysis tool Connect raises additional £4.6bn in single year as thousands of HMRC staff use the big data network to root out non-compliant taxpayers.

In total, 540,000 cases were enabled through HMCR’s use of Connect data in 2024-25, bringing in £4.6bn in tax in a single year, according to a freedom of information request by law firm Pinsent Masons.

This figure was up 35% on the annual average of £3.4bn that HMRC has collected from Connect-enabled tax investigations in recent years.

First launched back in 2010, Connect is a powerful data analysis tool that draws on multiple data sources, including third parties and merchant acquirer data, but it does not look at individual’s browser history or emails.

Connect captures information from multiple data sources and builds networks from this data ‘allowing HMRC to see patterns and links in the mass of data, that would be impossible for the human eye to spot, enabling the quick and efficient interrogation of information from a wide range of both internal and external data sources’.

HMRC stressed it ‘does not monitor social media in Connect’, and it ‘is absolutely not rifling through the personal details of hard working families, or treating ordinary taxpayers like criminals’.

The system is widely used across HMRC with around 4,300 staff able to access the database, and it is a vital tool for their investigatory work.

Ian Robotham, legal director at Pinsent Masons said: ‘With thousands of HMRC staff now using Connect, taxpayers are facing a level of oversight that would have been unthinkable just a few years ago.

‘Big data is already central to HMRC’s strategy. As Connect grows, taxpayers should expect far greater scrutiny of their financial affairs and far fewer gaps left undetected.’

HMRC has also confirmed a partnership with Palantir, the US data analytics firm best known for its work with military intelligence and security agencies. It is expected that this partnership will see more sophisticated data analytics applied to HMRC’s data.

‘Palantir’s involvement signals HMRC’s intention to push Connect’s capabilities much further, making the system even more all-seeing,’ Robotham said.

Palantir describes itself as a company that ‘builds AI-enabled digital infrastructure for data-driven operations and decision-making’.  

HMRC was keen to push back on any future role for artificial intelligence in the Connect ecosystem, stressing that ‘Connect isn’t an AI tool…it’s a powerful data networking, analytical and risking tool’.

An HMRC spokesperson said: ‘Connect is a powerful analytical tool that we have used since 2010, which has helped make us a world leader in using data and insight to collect tax that’s gone unpaid.

‘It is not the sole deciding factor in beginning or deciding the direction of a tax investigation. Other factors are also considered and human insight always makes the final judgement.’

Palantir already has a major NHS data management contract for its Foundry software, which NHS England uses to provide the capabilities of the NHS Federated Data Platform, connecting trusts and regional systems, and providing a consistent technical means of linking data that is already collected for patient care.

When the company won the NHS contract, it stressed that ‘working with an institution as important as the NHS on an issue as sensitive as data-sharing makes it critical for us to provide trust and confidence in how our software works and how we operate as a company’, adding ‘it is not, and never has been, in the business of collecting, mining or selling data’.

Tackling tax avoidance and the £40bn plus tax gap is a major priority for HMRC with millions of pounds of extra funding allocated in recent years by successive chancellors to hire more compliance staff.

The Labour government has set targets of raising an additional £5bn a year from this team by the end of the parliament in 2027 and HMRC’s Connect system will definitely play a key role.