HM Revenue & Customs has despatched its latest task force to the South-West to target undeclared property income and capital gains.

HMRC’s approach to uncovering undeclared income and gains is based on sophisticated intelligence gathering.

In the past inspectors used their local knowledge, including a trawl of the local newspaper, to pick up nuggets of information which might lead to an enquiry.

Now the process is largely digital.

HMRC uses a number of techniques, including its extremely powerful Connect computer system, to find undeclared transactions.

Connect regularly trawls the Land Registry and Valuation Office Agency computer records for details of property sales and compares the information with that shown on tax returns.

If your name appears against two or more properties and you are not declaring rental income, HMRC might decide to ask why.

Equally, if your name appears against a property sale and your main residence hasn’t changed, HMRC will check to see if you have declared a capital gain.

HMRC also receives returns from property letting agents, and can access other property-related data easily and quickly using Connect. Some of the data is from overseas sources.

While the computer system will come up with the list of potential transactions, a specialised team – the task force – will decide which leads look the most promising. They will then contact taxpayers who they suspect of failing to declare income or gains.

The task forces have gained an impressive track record of uncovering undeclared transactions and they expect to recover at least £5million in unpaid tax in the current South-West campaign.

The cost of being caught out would be not just the tax, but also interest and penalties.

If fraud is involved the price could include a criminal conviction.

Some people make genuine mistakes wrongly believing, for example, that a gift where no money changes hands cannot be taxable, but anyone who has deliberately failed to make a declaration should rectify the situation before HMRC catches up with them.

Anyone who thinks they are off HMRC’s radar should reflect on how many people or Government bodies have even a single piece of information which could catch them out.

Connect trawls literally billions of items of information and does exactly what the name suggests – it ‘connects’ them with individuals.

In this digital world, hiding from the taxman is virtually impossible, as some unfortunate South-West property owners will shortly discover.

Paul Aplin OBE is a tax partner with A.C. Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty; you can follow him on Twitter @PaulAplinOnTax.

He and fellow tax partners Amanda Gunter and Paul Kingdom can be contacted on 01823-624450.