HMRC's Annual Report Says AI Supports Some of Its Processes but Final Decisions Are Always Made by Experienced, Trained Caseworkers

HMRC's Annual Report and Accounts 2025 to 2026 covers April 1, 2025 to March 31, 2026 and was ordered to be printed on July 9, 2026. Parts of what the report says about AI follow, not the whole report.

Closing the Tax Gap

"The use of AI and advanced analytic tools across HMRC supported the protection and recovery of £10 billion in tax in 2025 and 2026," the report says. "This reflects tax protected and recovered from compliance interventions directly enabled by the use of AI and advanced analytical tools and techniques."

Among the examples the report gives, HMRC is using AI and advanced analytics "to highlight where tax returns may contain inaccuracies, which remains one of the main ways we identify cases for further investigation and intervention." It is also deploying natural language processing to assist complex cases, so that caseworkers can efficiently scan large volumes of documents and identify key information relevant to investigations.

Using AI and Advanced Technologies Safely and Responsibly

In the foreword, the department says it appointed its first Chief AI Officer in April 2026, "to provide clear leadership and ensure the AI advancements that we make are responsible."

The report says customers and the wider public want to feel confident about how HMRC uses AI, and that the department is committed to adopting it responsibly, "through careful implementation, robust safeguards and continuous learning." While AI supports some of its processes, the report says, it never replaces human judgment: "final decisions are always made by experienced, trained caseworkers, with results remaining explainable and compliant with data protection, security and ethical standards."

The department also uses synthetic data in testing environments, so that new tools can be developed and assessed "without using actual customer information." Its approach, the report says, is "underpinned by a well-developed AI assurance, ethics and risk management framework, tested with external ethics experts on our Professional Standards Committee." And "The adoption of AI across the department is coordinated by HMRC's dedicated AI Board and delivery team, which provides rigorous oversight and draws on external expertise."

It also says the department maintains strict guardrails around any AI that customers interact with directly, such as chatbots.