Your guide to HMRC’s information gathering tools

Sometimes, understanding how His Majesty's Revenue and Customs (HMRC) gathers information can feel a little daunting, especially when considering the sheer amount of information it needs to process.

To help make things clearer, this guide walks you through the main tools HMRC uses to collect, analyse and act on data.

How HMRC gathers and handles data

To keep up with the volume of data, HMRC has developed increasingly sophisticated information gathering infrastructures. These work to bring together statutory powers, international reporting frameworks, bulk data acquisition and advanced data analytics to build a detailed picture of taxpayers’ financial affairs. 

At the centre of these functions is CONNECT, HMRC’s data‑analytics system that pulls together vast amounts of third‑party, financial and government data to identify anomalies and potential risks. This is supported by extensive legal powers such as Schedule 36 of the Finance Act 2008, which allows HMRC to obtain information and inspect business records and Schedule 23 of the Finance Act 2011, which enables the collection of bulk data from third parties, as well as through global transparency regimes like the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA).  

Automatic information gathering tools

What’s the purpose of CONNECT?  

CONNECT was created to give HMRC a way to spot tax risks that would otherwise be time consuming and, in many cases, impossible to identify manually. As taxpayers’ financial affairs have become more complex with data sources coming from all directions, HMRC needed a system capable of joining everything together, highlighting anomalies and directing compliance teams to the right cases. CONNECT does exactly that.  

In 2024–25, CONNECT was involved in generating an estimated £4.6 billion of underpaid tax. This goes to show just how central it has become to HMRC’s enforcement strategy. 

CONNECT pulls in data from a huge range of sources, including: 

• Government databases 
• Bank accounts 
• Credit/debit card transactions  
• Land registry records 
• DVLA 
• Electoral roll 
•  Information from 38 member countries of the OECD (Organisation for Economic Co-operation and Development)

Using this data, CONNECT identifies any potential indicators of non‑compliance. Once it flags a risk, it continues to support HMRC teams throughout an investigation, including highlighting additional areas to review and cross‑checking taxpayer disclosures.

Ultimately, CONNECT helps HMRC make better-informed compliance decisions by turning huge amounts of data into practical, useful information.  

Automatic Exchange of Information (AEOI): CRS  

Under the Common Reporting Standard (CRS), HMRC receives annual financial account information from more than 100 jurisdictions and shares equivalent UK‑held data with overseas tax authorities. In June 2025, updates were introduced which expanded CRS to include e‑money institutions, imposed mandatory registration for financial institutions by 31 December 2025, and increased penalties for non‑compliance. 

HMRC also benefits from other reporting regimes, including FATCA, enhancing its visibility further. 

Digital and online data collection 

HMRC has, and continues to gather, a large amount of data from digital and online sources, including: 

• Online marketplaces 
• Crypto exchanges 
• Travel bookings 
• Digital payment providers  
• Social media platforms 

It increasingly uses Artificial Intelligence (AI) and web scraping techniques to assess lifestyle indicators and detect potential undeclared income if someone is living beyond their reported means. This expands HMRC’s ability to identify discrepancies and select cases for enquiry.  

Tip-offs  

Third-party tip‑offs form an important part of HMRC’s wider compliance strategy. These can come from formal AML‑regulated disclosures, industry whistleblowers and even disgruntled employees. HMRC reviews each submission and considers if the information provided points to undeclared income or undisclosed assets.

While tip‑offs vary in reliability, they play a vital role in identifying tax non-compliance. A credible report, particularly one containing insider information, can trigger a more in-depth compliance check or escalate an existing enquiry, making tip‑offs an increasingly influential element of modern HMRC enforcement. 

The government has recently announced plans to strengthen the UK’s tipping‑off framework by introducing a reward mechanism for high‑value, actionable intelligence. The aim is to improve the quality of information received and encourage individuals to come forward in cases involving significant or sophisticated evasion. 

Manual information gathering tools

Schedule 36: Collecting information  

Schedule 36 of the Finance Act 2008 enables HMRC to acquire information or documents “reasonably required” to check an individual’s tax position. They can issue several types of information notices, including:  

• Taxpayer notices – to check an individual’s tax position  
• Third-party notices – to seek information from others, such as accountants, when investigating a known taxpayer 
• Identity unknown notices - to obtain information on taxpayers whose identity is not yet known (for example, customers with offshore accounts)  
• Identification notices - to obtain name, address and date of birth when known data is incomplete  
• Power to inspect business premises – to enter a taxpayer’s or third party’s business premises to review the premises, examine business assets and inspect relevant documents. 

Schedule 23: Bulk data gathering from third parties 

Schedule 23 of the Finance Act 2011 allows HMRC to obtain bulk data – such as rental payments and other income flows – from categories of data-holders, including:  

• Letting agents 
• Employers 
• Banks  
• Digital platforms 

HMRC acquires this data through data-holder notices, which is then processed through CONNECT for compliance purposes. 

Conclusion

HMRC’s information‑gathering powers are wide-reaching, driven by huge amounts of data. CONNECT gives HMRC the ability to analyse huge amounts of data, Schedule 36 and Schedule 23 give it the legal authority to directly request information, and global regimes such as CRS and FATCA give it visibility on overseas assets and accounts.

Together, these tools mean HMRC now has a detailed picture of taxpayers’ affairs – both in the UK and offshore. As these capabilities continue to grow, it’s likely we’ll see more enquiries that go even deeper in the years ahead.