HMRC signs £175billion deal to crack down on fraud and tax errors after 93,000 complaints
HM Revenue and Customs (HMRC) has signed a major £175million agreement with British artificial intelligence company Quantexa as the tax authority seeks to crack down on fraud and improve its struggling customer service operations.
The decade-long partnership, announced today, will see Quantexa’s AI-powered systems integrated into HMRC operations to help identify fraudulent activity and detect errors in tax returns more quickly.
The move represents one of the department’s most significant technology investments in recent years as ministers face growing criticism over HMRC service standards and response times.
Quantexa, which is headquartered in the UK and valued at around £1.9billion, already works with major international companies including HSBC and Vodafone.
Its technology combines data held by HMRC with information from external sources, allowing investigators to identify hidden links between businesses and individuals potentially involved in fraudulent schemes.
The platform will also support HMRC staff handling taxpayer enquiries and administrative cases, with the department hoping the system can reduce delays that have become a major source of frustration for the public.
Quantexa said its tools would also help identify legitimate payments sent to HMRC using incorrect reference numbers, an issue which frequently creates administrative complications for taxpayers and officials alike.
The company’s AI systems are designed to analyse large volumes of data and detect patterns that may otherwise be missed by human investigators.
However, Quantexa stressed the technology is intended to support employees rather than replace them entirely.
Vishal Marria, chief executive of Quantexa, said: "In Government environments, AI cannot operate as a black box. Decisions need to be transparent, auditable, and explainable, particularly in areas affecting citizens directly."
He said the technology would "support human decision-making, not replace it".
The chief executive also sought to reassure taxpayers over the security of sensitive financial information handled through the agreement.
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Mr Marria confirmed staff working on the HMRC contract would operate separately from the rest of Quantexa’s business operations, adding: "We never take HMRC data away from the HMRC environment."
The partnership comes amid mounting criticism over HMRC’s customer service performance, with official complaint figures continuing to rise.
Freedom of Information (FOI) data obtained by the Contentious Tax Group revealed that complaints against HMRC exceeded 93,000 during the 2024/25 financial year.
That marked a sharp increase compared with approximately 70,000 complaints recorded during 2020/21.
Slow response times have consistently been identified as one of the primary concerns raised by taxpayers attempting to contact the department.
Public dissatisfaction with HMRC’s service standards has increased steadily in recent years as demand on the department has grown.
Labour’s decision to award the contract to a British company also reflects growing concerns among ministers regarding what officials describe as "digital sovereignty".
There has been increasing caution within Government over reliance on major American technology companies to deliver critical public sector infrastructure.
Those concerns were highlighted previously following the controversial £330million deal awarded to US technology company Palantir to build an NHS data platform.
HMRC hopes the partnership with Quantexa will modernise the department’s operations while strengthening its ability to combat increasingly sophisticated forms of tax fraud and administrative error.
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