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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

HMRC turns to social media data to identify tax fraud

Author: Azizur Rahman  14 June 2013
5 min read

The explosion in social media over the past decade has had an effect on the workplace. But for many reasons it’s crucial to keep work and play separate.

We live in a high-tech age that probably could never have been predicted even 25 years ago. The once cutting-edge mobile phone that emerged in the 1990’s now enables us to do everything from watch films, order our shopping and keep in touch with anyone, anywhere at any time. Impressive stuff.

Such developments have brought rewards for many and great enjoyment for many, many more. Facebook is now used by more than a billion people each month. Just over eight years ago, that figure was a far more humble (but still impressive) million. The urge to communicate in an online manner has become the success story of the millennium so far. We are, online at least, becoming more sociable. Part of the reason is that we can do it just about anywhere. And that looks as if it is going to pose a few problems in the workplace.

Traditionally, the workplace breaks involved a dinner hour, cigarette break or cup of coffee and a chat with a colleague. Thanks to technology, we can communicate with the world during our work breaks, after work and – if we’re feeling rebellious – when we should be working. There is a chance, therefore, that staff may not be paying full attention to the work in hand because they are busy viewing Facebook pages, tweeting or sending emails that have little or nothing to do with what they should be doing. And the flip side of this is that they may divulge information regarding their work that should never ever leave the walls of the workplace. Social media, it would appear, can deal a double blow to employers: it can lead to their employees becoming less efficient and, at the same time, lead to them letting slip sensitive information.

If the last few lines seem like the grouchy approach of a hard-bitten or slightly paranoid boss then think again. No lesser institution than the tax man agrees. According to “Computing’’ magazine, HM Revenue and Customs (HMRC) has started using its Connect data analytics system to trawl data information sharing websites such as social media to help it uncover tax fraud. HMRC’s Head of Data Analytics Mike Hainey has been quite open about the practice, stating that the information in question is “visible and available legally for HMRC to review’’. Facebook, Twitter and business sites such as RatedPeople.com seem to be among the first ports of call for HMRC’s data analysis team, as well as more traditional business-related data such as that provided by credit reference agencies and Companies House.

So, if even the tax man is keen to have a look at yours and your staff’s social media output, isn’t it about time to take action to reflect this? It’s already known that government agencies share data among themselves and with other foreign investigating bodies. This latest news about “the man’ monitoring social media shouldn’t come as a major surprise. But it should serve as a reminder of the need to have a strict workplace policy on social media.

Noone is saying that a misplaced word or phrase on Twitter is going to prompt a massive investigation by watching authorities who suddenly suspect dodgy activity. But it could happen. And perhaps more likely is the possibility that someone gossiping about their work on Facebook may just let something slip that could cost their employer money or even lay them open to the risk of fraud.

For example, mentioning “The boss on his way to Brazil to seal the credit software deal’’ may seem like tittle tattle between two people online. But in the wrong hands – or rather, if it is seen by the wrong eyes – it could place the company in an extremely vulnerable position. Could the company be taken for a ride by someone who now knows the boss is out of the country? Could the boss get to Brazil only to find out he has been beaten to the deal by a rival who learnt about his movements via his employee’s Facebook chat? Could the boss even be placed under investigation by authorities suspicious of his movements and talk of issues such as “credit software’’?

Yes, it may sound a little pessimistic. But it is possible. Commercial rivals, professional criminals and others looking to gain an advantage have always targeted companies or individuals in any way possible. Social media is perhaps one of the most direct ways of doing this. Which is why a strict procedure is needed regarding the workplace, employees and social media In short, the policy needs to read something like “No use of social media in the workplace or in working hours and no mention of work on social media at any time or place’’. The most innocent or humorous comment posted on Facebook or in a tweet could be used by someone against the company. There is also the danger that someone could put something online that they misheard in the workplace or heard correctly but misunderstood it or misrepresented it online. Added to these factors is the problem that anyone may then read that comment and misunderstand it; causing further problems.

Most high-profile fraud cases have an element – and usually a large one – of communication between parties. Such communications can prove the backbone of an investigation, condemn a person for their misdeeds or prove that a particular wrongdoing was only part of a bigger picture. At Rahman Ravelli, we are currently handling a case where 500,000 emails are being examined as potential evidence by authorities. The authorities know that a person’s social media can not only tell them much about him or her – it can also take investigators into whole new directions that they would not have previously been aware of. Such a development can place anyone under investigation and put them and their business under great strain. Most of our serious business crime cases involve conspiracy – or at least an allegation of it – and any online communication can be seen, rightly or wrongly, as a “smoking gun’’ by investigators. Having a strict policy as mentioned earlier can remove the need for such investigation and the turmoil that often results. After all, when the Libor scandal broke last year, the Financial Services Authority started examining hordes of emails with messages including “If you know how to keep a secret I'll bring you in on it", "If you breathe a word of this I'm not telling you anything else" and perhaps most tellingly "This is the way you pull off deals like this chicken, don't talk about it too much, two months of preparation... The trick is you must not do this alone...this is between you and me but really don't tell ANYBODY." But it wasn’t, as we now know, as if nobody got to find out.

Such examples are stark reminders of how online communication can provoke investigators’ interest. With this in mind, defence teams have to be familiar with the updated Attorney General Guidelines in respect of Digitally Stored Unused Material. The guidelines recognise both the enormous increase in the volume of digitally stored material - including social media – and the role defence teams have in defining the scope of searches involving such material. In general terms, the guidelines state that: data must not be changed, those accessing data must be competent to do so, an audit trail must exist, the case officer must ensure these principles are followed. A record must be made of all digital material seized or copied. These records must detail the searches carried out, persons involved, search words or terms used and judgements made while making searches. The prosecution has a duty to follow all reasonable lines of enquiry in relation to third parties in the UK or material outside the UK.

The guidelines are detailed and are not repeated in full here. But the fact that they exist is official recognition of how digital evidence is a major component in many criminal investigations. And this not only proves the need to gain an expert lawyer if you find yourself in such a situation – it also highlights the way a few careless words on social media could put someone in a very awkward situation.

Azizur Rahman C 09369

Azizur Rahman

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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