The Treasury has issued details about plans to make it easier to spot and target tax dodgers
Hi-tech plans could be used to tackle a serious problem in the UK. MPs heard that HMRC bosses are working out how artificial intelligence could help close the tax gap being exploited by fraudsters within the system.
Tax avoidance means bending the rules to try and secure a tax advantage. Between 2023 and 2024, it’s estimated the UK Government missed out on £0.7bn because of tax avoidance.
According to HMRC, tax avoidance typically involves “contrived, artificial transactions that serve little or no purpose other than to produce this advantage”. Officials say it means “operating within the letter, but not the spirit, of the law”.
Tax evasion differs slightly, with the government describing this as “a deliberate attempt not to pay the tax which is due” – which is against the law. A spokesperson said: “We will pursue those who engage in evasion, with serious consequences for those who don’t pay all the tax they owe, from financial penalties to criminal conviction and imprisonment.”
The UK government’s estimated losses from tax evasion stood at £5.5 billion in 2022-23, rising to approximately £6.5 billion for 2023-24, reports the Express. Labour MP for Telford, Shaun Davies, questioned Exchequer Secretary Dan Tomlinson and got a reply on Tuesday, December 23.
He asked: “What assessments have been made of the potential for AI and digital technology to reduce tax evasion and tax avoidance?” The Labour MP for Chipping Barnet replied with an update on how emerging technology could help as a useful tool alongside experienced and trained humans.
He wrote: “HMRC’s expansion includes how they focus their compliance work through new risk-targeting capabilities to identify cases for investigation, improving case selection. It also means using AI to identify nascent issues with the tax system, so they can act rapidly to prevent them before they grow.
“HMRC is harnessing artificial intelligence to deliver a more efficient and professional service for customers. They will use new technology as a tool to help them do their jobs more effectively.
“Greater use of AI will mean that staff spend less time on admin and more time helping taxpayers. It will also help HMRC better target their action against fraud and evasion, to bring in more money for public services.
“Artificial intelligence supports some of their processes but never replaces human decision-making and oversight. HMRC remains committed to the safe use of these technologies, underpinned by strict data protection, security and ethical standards.
“In cases where AI is used in a way that could impact customer outcomes, HMRC ensures that results are explainable and that there is always human oversight. This means that even when AI is used to support decision-making, final decisions are always made by experienced, trained case workers.”
