The United Kingdom’s HM Revenue and Customs (HMRC) has announced a 10-year, £175 million ($233 million) partnership with British artificial intelligence (AI) company Quantexa to revamp its data systems and accelerate the adoption of artificial intelligence across the tax authority. The deal is one of the largest AI transformation projects in the UK public sector.
The project will enhance operational performance, improve fraud prevention, minimize errors related to taxes and improve customer service for millions of taxpayers across the UK. Additionally, HMRC will use Quantexa’s Decision Intelligence Platform to connect disparate data sources and create a smarter, more connected data infrastructure.
AI to Improve Fraud Detection and Reduce Tax Gap
A primary goal of the partnership is to reduce the UK’s tax gap – the difference between the amount of tax that is owed and the amount that the government actually collects. Furthermore, AI-driven analytics will enable HMRC to better spot suspicious transactions, undisclosed financial relationships and inconsistencies in tax returns than existing systems.
Quantexa focuses on decision intelligence technology that brings together artificial intelligence, contextual data analysis and advanced modeling techniques to discover patterns in large data sets. In addition, its platform can detect fraud networks, link related entities and automate risk assessments at massive scale.
The AI system will reportedly also help identify administrative errors in tax returns, increasing accuracy and reducing manual processing.
UK Focuses on Secure, Responsible AI Infrastructure
The deal shows the UK government’s wider drive to build sovereign, responsibly governed AI systems. More specifically, secure, explainable and transparent AI deployment with tight controls on sensitive taxpayer data will be the focus of the modernisation programme, HMRC said.
Quantexa CEO Vishal Marria said the partnership was a good example of how governments can implement AI technologies at scale while maintaining governance and accountability. The company said trusted data foundations were essential for advanced analytics and automated decision-making systems.
The initiative is also part of wider UK government efforts to boost AI use in public services. At the same time, HMRC has already ramped up its investment in automation and AI tools as part of its strategy to be the most technologically advanced tax authority in the world.
Automation to improve taxpayer services
Beyond fraud detection, HMRC hopes that the AI modernisations will improve customer experience by streamlining workflows and removing delays in tax processing.
Automated systems will help connect taxpayer data across departments, cut down on duplicate work and streamline the resolution of issues. As a result, officials are confident this will enable staff to spend more time on complex cases as AI takes over mundane administrative tasks.
The government expects the initiative to lead to faster response times, better compliance monitoring and more efficient delivery of public services in general.
UK AI Minister Kanishka Narayan said the partnership shows how British AI innovation can be used to modernise government operations, boost security and efficiency.
Quantexa strengthens AI and analytics position
Quantexa, founded in London in 2016, is now one of the UK’s leading AI and analytics companies. It achieved unicorn status in 2023 and has grown internationally through partnerships in fraud prevention, compliance and enterprise AI transformation.
The HMRC deal represents another major milestone for Quantexa as the public and private sector continue to invest heavily in AI-powered decision intelligence technology.
The HMRC and Quantexa partnership could be a model for how governments around the world can leverage artificial intelligence to improve efficiency, security and taxpayer services in the digital age. As a result, governments can modernize legacy digital infrastructure.
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