HMRC’s big data tax investigation system “Connect” has delivered a £4.6bn boost to the Treasury in the past year, a 35% surge in additional tax identified through data-led investigations, according to international law firm Pinsent Masons. As HMRC expands its partnership with Palantir, advisers are being warned that AI-powered scrutiny of clients’ financial affairs is entering a new era.
Tax investigations based on HMRC’s big data Connect system brought in £4.6bn in additional tax in 2024/2025 tax year, up 35%* from the estimated average annual amount collected from Connect-enabled cases, says international law firm Pinsent Masons.
The Connect system is a powerful data-networking, analytical and risking tool that uses “big data” to manage compliance risk. It is used to assist with detecting tax evasion by analysing and cross-referencing data from a huge range of sources such as banks, online marketplaces, social media accounts such as Instagram, databases of property letting agents etc against tax returns.
The amount collected in the last year based on investigations using Connect data is sharply higher than the average of £3.4bn per annum that HMRC has collected from Connect-enabled tax investigations in recent years.
Connect is one of the largest datasets held by the Government and led to 540,000 Connect-enabled cases in the last year alone.
HMRC says that the Connect system is not simply a search tool, but a powerful data-networking tool allowing them to see patterns and links in the mass of data, that would be impossible for the human eye to spot.
Ian Robotham, Legal Director at Pinsent Masons says: “HMRC has spent time building up the amount of data sources that it can access and analyse.”
“The algorithms that it uses allows HMRC to spot anomalies that would otherwise go unnoticed by the human eye.”
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 even more sophisticated AI applied to HMRC’s data.
Palantir’s technology has been used in counterterrorism, policing and defence. Its involvement signals HMRC’s intention to push Connect’s capabilities much further, making the system even more ‘all-seeing’.
Connect has now become such a major part of tax investigations that around 4,300 HMRC staff have access to it.
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.”
Ian Robotham says, “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 stated “The figure of £3.4bn is an average additional annual yield over a number of years. Our latest estimate indicates that Connect-enabled cases achieved approximately £4.6bn in additional yield in the 2024/25 tax year.”
