Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Mandate HMRC to assess its readiness for new technology, including AI, and present plans.
Conclusion
We are concerned that HMRC is not well–placed to take advantage of the opportunities offered by technology, for example the development of artificial intelligence (AI) and e–invoicing. AI has the potential to improve the productivity and speed of HMRC services. But, as we have reported recently, achieving large–scale benefits from AI will require government departments to not only adopt new technology but also put in place the right foundations, including skills, infrastructure and the high–quality data on which AI depends. HMRC recognises that its ongoing use of legacy systems will constrain its exploitation of AI as they limit the accessibility and quality of data. Legacy systems also make HMRC more vulnerable to the use of AI by bad actors. HMRC has not provided some digital services that have been available to taxpayers in many of the world’s larger economies. HMRC has been slower than some tax authorities in adopting pre–population of tax returns and, along with others in government, has been slower at driving the adoption of e–invoicing, although the government began a consultation on e–invoicing in February 2025. recommendation HMRC should write to the Committee alongside its Treasury Minute response, with an assessment of how well–placed it is to take advantage of new technology including AI, and its plans and timetable for addressing the factors that constrain its capability and capacity to do so. 7 1 The cost of administering the tax system and trust in HMRC Introduction
Government Response Summary
The government has written to the Committee, stating HMRC is well-positioned for new technologies and is piloting several Generative AI initiatives. In 2025-26, HMRC will launch new AI-powered compliance tools and expand data-sharing, supported by an AI Board, training, and career development schemes.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented HMRC has written to the Committee alongside this Treasury Minute response. HMRC is well positioned to take advantage of emerging technologies, particularly AI, to modernise operations, enhance customer experience, and improve productivity. With over two decades of experience applying AI in areas such as predictive analytics, risk assessment, and fraud detection, HMRC has embedded AI into core compliance and customer service functions. This includes tools like VAT Predictive Analytics, Bulk Data Exploitation Capability, and debt prediction models. To further advance its AI ambition, HMRC is piloting several Generative AI initiatives: • A cross-government chatbot to improve navigation of HMRC guidance. • Copilot, trialled by thousands of staff, to enhance content summarisation, research, and search capabilities, with plans to scale significantly. • Call summarisation tools to streamline agent workflows and improve service delivery. In 2025-26, HMRC will launch new AI-powered compliance tools and expand data- sharing collaborations (e.g. with the DWP). These efforts are supported by a secure Gen AI Landing Zone hosted in HMRC’s Cloud tenancy, enabling safe use of advanced models like GPT-4o To ensure the right capability and capacity, HMRC has established an AI Board and delivery team, invested in training through the CDIO University and Digital Academy, and launched career development schemes to reskill staff into future-critical roles such as Cloud Engineers and Solution Architects. These initiatives underpin a clearly defined investment proposal focused on delivering improved compliance outcomes and operational efficiencies through AI-enabled digital delivery.