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