HMRC is ramping up its use of data mining technologies to check for discrepancies in financial records, following new measures announced in the Budget.

ACCA says the paper, A level Playing Field, which accompanied the Budget alluded to action to be taken on the growing use of 'Zappers' and other software by some retail businesses which want to delete or modify sales records to avoid paying tax. A recent paper from the Organisation for Economic Co-operation and Development ECD revealed that HMRC investigators trained in spotting such tactics found such devices were used in 68% of their investigations.

Chas Roy-Chowdhury, ACCA head of taxation, said: 'Zappers and similar software that supress sales data for tax advantage is of no benefit to anyone other than those using it. HMRC's crackdown on this is welcomed, and should be welcomed by all consumers.'

The Budget also contained a change to legislation which will allow HMRC to demand payment details from card payment processors. They will have to provide information about credit, debit, and charge card sales made by retailers. This will include the retailer's name, address, VAT number if available, and bank account details.

When fed into HMRC's Connect - which mines data from public records, business databases and the internet - the tax department can profile which businesses have anomalous records profiles by cross-matching data and segmenting taxpayers according to their behaviour and past relationship with the Exchequer.

Simon Massey, tax partner at Menzies, said: 'HMRC will use this information to cross check against VAT registrations and business income declared on tax returns. It will not identify the details of the credit or debit card holder, just the total sales made by particular businesses in each month. Any business that relied on card payment facilities should be aware that their business transactions could be being monitored without their knowledge.'

Estimates suggest the use of Connect has already generated around £1.4bn in additional tax yield.

Francesca Lagerberg, Grant Thornton head of tax said: 'This is clearly a mechanism that will be relied upon by HMRC going forward and these data mining techniques could become more powerful as further data becomes available to HMRC. For example, the enhanced tax information exchange agreement with the US will increase the amount of information on potentially taxable income exchanged between both countries. At the same time, HMRC is looking to conclude similar agreements with other jurisdictions.'