Advisors say that AI analytics on social media will improve tax compliance for HMRC.
Blick Rothenberg, a leading audit, tax and business consulting firm, said HMRC’s use of artificial intelligence to introduce people’s social media activities will improve tax compliance.
Fiona Fernie, a partner at the company, said HMRC’s connectivity system has been deploying advanced analytics to find that taxes are not paid. “Connect uses (and always uses) advanced analytics (such as pattern recognition, predictive modeling, and machine learning), which are all forms of AI. Social media is just one of many sources to connect comments.”
Connect was developed by BAE Systems and is estimated at £45 million to £100 million, with estimated costs expected to help recover over £3 billion of unpaid taxes.
Fernie highlights the efficiency gains such technologies provide for HMRC investigators. “Connecting can identify patterns and anomalies in data that human investigations need to be reviewed within seconds of months,” she said. “It not only enables real-time risk analysis; it also supports the work done by HMRC staff during the investigation.”
However, she emphasized that AI output is not used in isolation. “Human investigators also always look at the information collected and analyzed by the connected system. With the proper human supervision and safeguards, I would not find possible indicators that use AI to determine possible taxes that may not be paid at the correct level.”
HMRC recently confirmed that it uses publicly available online data to support compliance campaigns, including social media posts, blogs and other Internet content without privacy restrictions. This reflects the approach of other government departments, such as the Ministry of Work and Pensions.
Fernie suggests that HMRC may underestimate its AI usage. “The HMRC declares that AI is only part of a criminal investigation into tax fraud, which is strange because Connect uses real-time risk analysis as a tool to help determine the target of the investigation.”
This trend makes the importance of digital footprints increasingly important, even in daily online activities, as governments deploy technology globally to bridge compliance gaps and secure revenue.
