When HMRC published its Transformation Roadmap back in July 2025, it announced the department’s aim of creating a modern, digital-first tax system that would increase efficiencies, improve the customer experience and, at the same time, close the ‘tax gap’.
To help achieve this aim, HMRC has entered into a 10-year agreement with British tech firm Quantexa, to provide an AI-driven data platform that will be used, amongst other things, to identify fraud, track down misallocated payments and reduce response times within the department - something which has been widely complained about in recent years.
Quantexa described its Decision Intelligence Platform as a safe way to bring together complex, fragmented data into a single, governed environment, with the claim that this will become a blueprint for how the UK government deploys AI at scale. For those concerned about the accuracy of AI-generated information, Quantexa have emphasised that AI-automated decisions about taxpayers will still need to be manually checked and that it will only aid in supporting human decision-making, not replace it. The UK-based firm has made it clear that HMRC data will remain secure and that staff using the systems will remain separate from the rest of the company.
In addition, HMRC has rolled out Microsoft Copilot to 28,000 of its staff, with plans to increase this to 50,000 in the near future. As well as using AI to assist with tasks such as drafting letters and reports, HMRC say that it will also be used by compliance officers within tax enquiries and investigations, for example, by analysing taxpayer data and documentation, identifying patterns and flagging potential discrepancies. Like Quantexa, HMRC has emphasised that all outputs are reviewed by trained staff and final decisions will be made by caseworkers, not AI.
This is not HMRC’s first foray into the use of AI to help in tackling tax fraud. In 2010, the department launched its Connect system, which analyses data from multiple internal and external sources and cross-checks it to taxpayer records to identify risks and potential errors. Connect obtains data from sources such as banks, credit card providers, Companies House, Land Registry and even social media. Since January 2026, Connect has also had the ability to draw data from Cryptoasset service providers and it continues to develop and improve HMRC’s risk assessment capabilities.
When Connect was first introduced, there were concerns about whether the technology would replace human decision-making and the debate over the use of AI within HMRC is likely to continue as the technology becomes more widely used. HMRC will no doubt argue that appropriate safeguards are in place but it will be interesting to see how AI impacts the day-to-day work of the department and whether the projected efficiencies materialise.
How Crowe can help
With HMRC’s advancing technology, taxpayers may be more likely than ever to receive a letter from HMRC enquiring into their tax affairs. It is essential to get in touch with Crowe’s specialist Tax Disputes and Investigations team or your usual Crowe contact if you are in this position.
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