HM Revenue & Customs (HMRC), the UK’s tax authority, has announced a 10-year deal with British tech firm Quantexa to use AI for detecting fraud and tax return errors. The BBC has reported that the multi-year agreement will cost the UK government £175 million ($234 million). Under the partnership, Quantexa will combine data that the HMRC has collected with other sources to help it spot incidents of fraud, as well as to help it fix unintentional errors. It will also assist HMRC with its customer service needs and identify companies or individuals trying to hide fraudulent activities. In addition, the HMRC will use its technology to track down legitimate payments made by taxpayers under the wrong reference number.
Quantexa, founded in London back in 2016, develops AI apps and tools for data analytics and decision-making. Aside from the UK tax authority, it’s also working with the Switzerland-based Zurich Insurance Group Ltd. to enhance the company’s fraud detection. While the HMRC will use its technology to detect irregularities in tax filings and payments, the company told the BBC that its findings will still be checked by people and that its technology was made to “support human decision-making, not replace it.” Hopefully, that means taxpayers won’t have to face false accusations of fraud based on the findings by the company’s AI.
“In government environments, AI cannot operate as a black box,” Quantexa chief executive Vishal Marria told the BBC. “Decisions need to be transparent, auditable, and explainable, particularly in areas affecting citizens directly.” Marria also said that Quantexa will “never take HMRC data away from the HMRC environment” to ensure the data would remain secure.
Back in 2024, the US Treasury Department (home of the Internal Revenue Service) admitted that it had been using AI for fraud detection. It said back then that it prevented fraud and recovered payments worth over $4 billion from October 2023 to September 2024 using AI tech. It has since become more common for government agencies around the world to use AI — the US, for instance, has signed multiple agreements with companies like Google, xAI, Anthropic and Microsoft to use thei technologies.
