Who is next on HMRC's unpaid tax hit list?

In the last three years alone, HM Revenue and Customs (HMRC) has used its special task forces to recoup almost £1bn in unpaid tax.

Tax crackdowns are coming thick and fast, with a number of groups increasingly cropping up on HMRC's radar.

But just how are specific job sectors picked for investigation? HMRC collates as much third party information as possible from local councils, banks etc to feed into its powerful computer system, called Connect – which cost HMRC £45m to build three years ago.

Connect is said to hold more data than the British library and is designed to accurately pinpoint data that would otherwise go undetected. For instance, Connect houses information on every single property purchased in the UK to date, using its direct links to the Land Registry. This was critical to HMRC clamping down on buy-to-let landlords who had managed to avoid paying the right amounts of tax.

So who are the tax authority focusing on currently? HMRC is reportedly keeping a keen eye on two specific areas: those with multiple income streams and property landlords.

Landlords are under particular scrutiny as HMRC estimates that £500m is lost every year in unpaid tax in this sector. They believe thousands of landlords pay little or no tax on rental income, while other do not declare capital gains on second properties.

The 40,000 landlord suspected of bending the rules will receive a letter over the next four months from the tax authority, giving them the opportunity to clear their name.

Meanwhile HMRC's 'second incomes' campaign is targeting everyone from car boot traders and part-time taxi drivers to freelance writers and consultants. It's a relatively fresh campaign and will remain one of the Revenue's main focuses over the next 12 to 24 months.

Experts predict ex-pats could be next to incur the wrath of HMRC. The Government may prevent ex-pats who let out property in the UK from using the personal allowance (income on which no tax is paid). These proposals are currently under consultation but could raise up to £400m a year for the Exchequer is given the green light.

The Revenue's Connect system is also clamping down on undeclared offshore bank accounts, having recently obtained powers to spot overseas assets more easily.

Date published 13 Oct 2014 | Last updated 13 Oct 2014