Military technology aimed at tax dodgers

TAXPAYERS tempted to economise with the truth as they face the springtime ritual of completing tax forms be warned, writes Susan Watts.

Authorities in the United States are using military technology to deal with evasion, and the technique is coming to Britain. A team at the Los Alamos National Laboratory in New Mexico (known for its nuclear weapons development) is using computing skills to spot signs of fraud in tax returns that have been filled and filed electronically.

Tax consultants in Britain are already using computerised versions of tax returns instead of paper forms for about a million personal taxpayers. These are not yet sent into tax offices electronically, but the Inland Revenue said this would be a simple step.

In February, the Revenue put out feelers with a document on what it calls an 'Electronic Lodgement Service'. It plans trials on corporation tax returns from November, and anticipates a national computerised filing system by April 1997.

The American team is using what is known as 'neural networks' software. Neural network computers operate in a way that echoes the functions of the human brain, and recognise patterns within reams of information. The team's program was used to spot unusual trends in export licence requests, in the hope of preventing nuclear proliferation.

A report in today's New Scientist says that in the US forms claiming compensation for overpaid taxes are being sent in under false names, and tax consultants are inflating the size of refunds and keeping the extra.