Source · Select Committees · Public Accounts Committee
Recommendation 36
36
Accepted
HMRC acknowledges legacy IT systems and poor data management hinder AI adoption and increase cyber risks.
Conclusion
We asked HMRC whether the age of some of its IT systems were going to make it more difficult to adopt AI. HMRC agreed and considers the “critical thing with AI is making sure you really have a handle on where your data is and that you are managing your data well.” 72 We also asked HMRC about the risk posed by AI to tax evasion and avoidance.73 HMRC told us that “it is a fact of life that bad actors tend to be a bit more agile and a bit more flexible than good actors. You see that right across big organisations, public sector and private sector.” HMRC also agreed that legacy systems are more likely to suffer cyber–attacks.74
Government Response Summary
The government agrees and states it has implemented the recommendation by leveraging AI in various functions, piloting Generative AI initiatives, and investing in new AI-powered compliance tools and staff training for AI capability.
Government Response
Accepted
HM Government
Accepted
6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 HMRC has written to the Committee alongside this Treasury Minute response. 6.3 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. 6.4 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. 6.5 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 6.6 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.