HMRC is using AI to scan for signs of a lifestyle that could indicate tax fraud
Tax inspectors are using artificial intelligence to snoop on Brits’ Facebook, Instagram and other social media posts in the hunt for evidence of tax fraud, it has emerged. The technology, capable of scanning for signs of lavish lifestyles such as luxury holidays or expensive purchases, is already being used in criminal investigations.
Officials insist it is used only in serious cases and with “robust safeguards”. But campaigners and MPs have warned it risks becoming a mass-surveillance tool that could wrongly accuse innocent taxpayers. The admission comes amid growing concern over the creeping use of AI in government decision-making – and fresh memories of the Post Office Horizon scandal, where blind faith in computer systems wrecked lives.
Bob Blackman MP branded the tactic “draconian”, warning: “If they start taking legal action against individuals based on that, you can see there’s going to be a problem.”
Sir John Hayes, former security minister and chair of the Tory Common Sense Group, said: “The idea that a machine must always be right is what led to the Post Office scandal. I am a huge AI sceptic.”
The AI tools work alongside HMRC’s powerful “Connect” system – a data-crunching network that has for years scanned billions of records from banks, property deeds and other databases to spot potential cheats. Chancellor Rachel Reeves has ordered officials to claw back £7billion of the UK’s £47billion “tax gap”, and HMRC is trialling AI-powered assistants to flag suspicious returns – even issuing warnings that could later be used in court.
Critics warn the technology is edging towards making automated decisions, despite HMRC’s insistence that “a human is always in the loop” and has the final say. The fears intensified after a tribunal ordered HMRC to reveal whether AI was already being used to assess claims for research and development tax credits – a move prompted by a Freedom of Information request from tax expert Tom Elsbury.
The Department for Work and Pensions (DWP) is also trialling AI, with 20,000 staff using it to draft documents and summarise meetings. HMRC has approached around a dozen tech firms about using AI to help recover billions in unpaid tax – much of it linked to offshore accounts.
An HMRC spokesman said: “Use of AI for social media monitoring is restricted to criminal investigations and subject to legal oversight. It supports our processes but does not replace human decision-making.”