HM Revenue & Customs

Tax evasion and avoidance are estimated to represent just 15% of the difference between the amount of tax theoretically owed and what is actually paid. By contrast, inadvertent activities (often but not always negligent) make up 46% of the gap. So HMRC’s push to close the tax gap involves not only tackling fraud and increasing its compliance and debt interventions, but also ‘upstream’ measures such as modernising its use of data to promote compliance, and raising the standards of advisers and intermediaries.

Technology is central to HMRC’s performance improvement plans. It aims to be a ‘digital-first’ organisation by 2030, with at least 90% of its interactions with customers and intermediaries taking place digitally. This involves developing systems that are straightforward to use and accessible – some will employ AI to assist customers, without needing an HMRC adviser. HMRC currently has, in its own words, “an ageing IT estate which requires high maintenance and costly security and data management”, so its digital metamorphosis will require significant time and investment. It also has a mixed record with technology, which may cast doubt over its proposed timeframes.

HMRC is pursuing a wide range of initiatives to help reshape the tax and customs system. One of these initiatives is the simplification and modernisation of the legislative and administrative framework. In April 2025, for example, the announcement of a raft of measures aimed at improving the system included the simplification of the capital goods scheme and the spirit drinks verification scheme, and the establishment of a working group on simplifying and improving the administration rules for corporate interest restriction – as well as a bevy of other measures intended to reduce administrative burdens and increase certainty, and a considerable number of consultations on a wide variety of issues. As HMRC follows its transformation roadmap there will be many more such announcements for businesses and their advisers to digest and, in some cases, to respond to.

As mentioned above, HMRC has plans for customerfacing AI. It is also investing in AI-powered systems for caseworkers, including generative AI solutions which will provide quicker, clearer and more consistent guidance that should speed up casework. HMRC aims to launch sandboxes for AI innovation and work with third parties to develop AI-driven products. A digital academy has also been established by HMRC to assist its workforce in solving business problems as well as upskilling use of AI effectively.

HMRC is moving towards a technology-driven customs regime. It is planning on achieving this through the use of AI and the integration of tax and business systems. This should allow for, among other advantages, easier and more accurate sales and purchases recording, faster navigation of the customs system and reduced manual administration by HMRC.