HM Revenue & Customs (HMRC) has confirmed it is using artificial intelligence (AI) to monitor taxpayers’ social media accounts as part of criminal investigations into suspected tax fraud. The disclosure has sparked a heated debate on data privacy and the expanding role of technology in tax enforcement.
The tax man is now a digital watchdog
HMRC has stated that AI is being used to analyse social media posts for inconsistencies that may suggest undeclared income. For example, a post about a lavish holiday or an expensive new car could trigger a “red flag” if it doesn’t align with a taxpayer’s declared earnings.
The tax authority insists this technology is only used in criminal cases and is subject to robust safeguards, with human oversight remaining a crucial part of the decision-making process. The use of AI is part of a broader push to close a £7bn tax gap, moving HMRC toward a more automated, data-driven approach.
HMRC’s official privacy notice on the GOV.UK website confirms that where the use of AI could impact customer outcomes, “there is human involvement” . This is a subtle but critical distinction from a previous guarantee of “human judgment.”
Implications for the self-employed
For the UK’s self-employed community, this new development has significant implications. Your online presence, which was once considered separate from your professional life, is now a potential data point for HMRC.
The line between your personal life and tax liability is blurring, and practitioners must be prepared to address how a client’s digital persona aligns with their tax returns.
The reliance on AI increases the risk of erroneous automated flags, echoing concerns about a potential “Horizon Post Office-type scandal” where an automated system’s judgment is trusted over human verification.
An algorithm could flag your social media account to HMRC
According to an article in the Liverpool Echo, senior MPs have warned against a similar scenario, with one stating, “The idea that a machine must always be right is what led to the Post Office scandal.” This sentiment was also echoed in an article by Business Quarter.
This means it’s more important than ever for self-employed individuals to maintain meticulous financial records. While HMRC assures that human involvement is guaranteed, the initial flagging of your account could be entirely algorithm-driven.
Accountants are now on the front line, not only in preparing accurate returns for their self-employed clients but also in defending clients against AI-generated inquiries and audits.
The era of purely paper-based tax investigations is over; the future of compliance is digital, and it’s watching what you post.
