HMRC has reportedly confirmed for the first time that it uses AI to monitor taxpayers' activity on social media.

According to a report by the BBC, HSBC said that the technology will not “replace human decision-making” and will be subject to legal oversight.

A spokesperson told the broadcaster that the government department only uses surveillance in criminal cases, with legal oversight and human involvement in final decisions.

“Greater use of AI will allow our staff to spend less time on administrative tasks and more time helping taxpayers, as well as better identifying fraud and tax evasion to increase revenue for public services,” an HRMC spokesperson said.

The admission has since sparked public debate, with critics arguing that the system blurs the line between privacy and financial control, raising ethical questions about digital surveillance.

According to Chris Etherington, partner at accounting firm RSM UK, automating tax payment monitoring carries risks that could lead to misidentification, particularly with fake or hacked social media accounts.

Etherington added that such practices will clearly still require a human touch in the process to ensure that appropriate decisions are made and that all relevant information is reviewed.

"AI could help HMRC to streamline its processes and make it easier to compile all the available information about an individual," he explained.

HMRC stated that it uses AI tools alongside the department’s traditional checks to analyse online posts, such as photos of luxury holidays, purchases or lavish lifestyles that may not correspond to a person's declared income.

The system is part of HMRC's broader fraud detection strategy and complements its long-standing data analysis system, Connect, which cross-references billions of pieces of data from bank records, property records and more.

Developed in 2015, Connect gathers an impressive range of information, including bank records in the UK and overseas countries, savings, pensions and investment records, land registry records, credit and debit card payments, activity on online platforms, DVLA records, earning and benefits, tax documents and social media.

Over the past year, HMRC has embarked on a digital transformation process, announcing its transition to digital capabilities, including AI.

At the end of July, it published its Transformation Roadmap, which sets out ambitious plans to become a digital first organisation by 2030, with 90 per cent of customer interactions taking place digitally.

The roadmap outlines more than 50 IT projects that aim to simplify tax processes and introduce new AI technologies to help customers meet their tax obligations and support HMRC in the monitoring of the UK’s tax system in near real-time.

HMRC stated that it intends to use AI to assist advisors and social workers, enabling them to automate call summaries and use internal generative AI (genAI) chat assistants to support them in their work.

AI-powered digital assistants will also be introduced to help customers easily navigate HMRC services and improve the ability to update HMRC content and guidance on GOV.UK.

James Murray MP, exchequer secretary to the Treasury, said: “By 2030, taxpayers can expect a modern and innovative HMRC with cutting-edge AI, industry-leading customer service practices, and a laser focus on delivering taxpayer value for money by ensuring everyone pays their fair share.”

As announced in the 2025 Spending Review, HMRC says the AI rollout will not lead to staff cuts.

The government body has confirmed that £1.7 billion will be allocated over four years to fund the recruitment of 5,500 new tax compliance officers and 2,400 debt management officers.

“By 2030, UK citizens will experience a tax administration system that is more automated, more focused on self-service, and better set up to get things right first time so they can fulfil their tax obligations,” said JP Marks, HMRC’s chief executive and first permanent secretary.

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