The cost of tax avoidance has been highlighted by recent revelations of High Net Worth Individuals (NHWIs) in the public eye and their purportedly ‘perfectly legal’ tax avoidance schemes. It’s galling for those people who pay their taxes to see the super-rich using their money to find ways of keeping their tax bills to a minimum.

But tax and revenue agencies are fighting back. They’re getting smarter in their approaches to tax avoidance, using digital technologies to transform their understanding of potential avoiders and fraudsters.

The uptake of digital technologies is allowing agencies to make better use of information to build a picture of each individual taxpayer. Risking, using both deterministic and predictive risk factors, and intervention can be designed into upstream (customer facing) transaction processes, such as filing a tax return. This will allow tax administrations to pursue high risk cases much earlier in the value chain. 

While the use of digital tools to track people’s lives may sound Orwellian, surely it’s something we’ve all become used to in the commercial sector. After all, who hasn’t logged on to the internet only to be bombarded with ads from companies they’ve previously interacted with online? Now the public sector is catching up – and fairly fast at that.

Social analytics uses Big Data, transforming multiple social media information sources into customer insight. These new data sources and analytical techniques are being leveraged to match tax and private sector data on fraud. In Italy the tax authorities are using a digital ‘income meter’ to spot people living above their stated means.

Watch out tax avoiders – digital clearly has the power to transform.

Get in contact with me to find out more or share your thoughts.