HM Revenue & Customs are looking to extend their reach into digital transactions in a bid to hunt for evaders and boost efficiency.

The moves follow increasing attempts by HMRC to record and monitor digital transactions as part of their Making Tax Digital programme which requires some businesses to keep digital records and submit VAT Returns through software.

Starting in 2022 the UK tax authority will have new powers to obtain data from financial institutions without the consent of the taxpayer or the independent tax tribunal.

The following year HMRC will require online companies such as Airbnb, eBay and Amazon to share details of earnings of those selling on their sites with the tax authority.  However, the scope of reporting and which sellers will be affected is still to be announced.

HMRC argue that better use of data through MTD will help them deliver a system which is fairer and harder to evade. They also hope that by making the tax reporting systems more automatic, it will be quicker and easier for taxpayers to meet their obligations.

However, some have voiced their concerns over privacy and the increased scrutiny of our digital footprint. Others have pointed out that HMRC already collects considerable amount of online information from third parties such as banks or building societies which is used for compliance checks.

Tom Wallace of WTT and a former tax inspector commented; “The general public would be quite surprised at the information HMRC has on people.  In a digital world, assume that most things our doing are leaving a digital fingerprint and can find their way into the Revenue’s hands.”

Andrew from Arcus said; “As we get used to increasing digitalisation in our daily lives, it is understandable for HMRC to reflect this in their processes.  However, they need to be careful that the balance between convenience and privacy is upheld in order to keep taxpayers on board.”