Monday, 21 July 2025

HMRC’s Slow March Toward AI: A Missed Opportunity for Transformation


The recent announcement that HM Revenue and Customs (HMRC) has established a “landing zone to safely exploit” generative artificial intelligence (AI) in its 2024/25 annual report sounds promising on the surface. It signals a step toward embracing cutting-edge technology to streamline operations and enhance public services. However, beneath the optimistic rhetoric lies a troubling reality: HMRC’s adoption of AI has been frustratingly slow, lagging behind both the private sector and the transformative potential of this technology. While the establishment of a dedicated AI framework is a welcome move, it’s hard to shake the sense that HMRC is playing catch-up in a race where others have already taken the lead.

A Decade of Hesitation

HMRC’s journey with AI is not new. As early as 2017, the organisation was exploring automation and machine learning, with initiatives like the Automation Delivery Centre aiming to automate 10 million processes by 2018. The Connect system, in use for over a decade, has been a cornerstone in combating tax evasion by aggregating data from diverse sources like the Land Registry and online marketplaces. Yet, despite these early forays, HMRC’s progress in leveraging more advanced AI, particularly generative AI, has been glacial. The private sector—think tech giants, financial institutions, and even mid-sized startups—has been harnessing AI for years to optimise processes, personalise customer experiences, and drive innovation. Meanwhile, HMRC’s efforts have felt like cautious tiptoeing rather than bold strides.

The Public Accounts Committee’s (PAC) recent warning underscores this lag, stating that HMRC is “not well-placed to take advantage of the opportunities offered by technology, such as the development of artificial intelligence.” This critique stings because it highlights a systemic issue: a lack of urgency and strategic vision. While HMRC touts its “landing zone” for generative AI, the reality is that this framework feels like a belated response to a technological revolution that’s already reshaping industries worldwide.

The Promise of AI for HMRC

The potential for AI to transform HMRC’s operations is immense. Generative AI, capable of producing text, summarising data, and even generating code, could revolutionise how HMRC interacts with taxpayers. Current use cases, such as summarising customer helpline calls or powering chatbots for online advice, are promising but limited in scope. Imagine a world where AI-driven analytics predict tax evasion with pinpoint accuracy, where chatbots provide real-time, personalised guidance to taxpayers, or where AI streamlines recruitment and compliance processes to save time and resources. HMRC’s own report highlights tools like “Skill Scribe,” which simplifies recruitment, and a regional insights tool for labour market analysis—proof that the technology can deliver when applied.

Yet, these initiatives are still in their infancy. The department’s participation in a cross-government AI chatbot pilot and its use of AI for enhanced compliance targeting and fraud detection are steps in the right direction, but they feel like pilot projects rather than a comprehensive strategy. The fact that only 7,225 staff members completed AI-focused training in 2024/25, while commendable, is a drop in the bucket for an organisation of HMRC’s size. Scaling up AI adoption requires not just training but a cultural shift—one that embraces risk-taking and innovation over bureaucratic caution.

The Risks of Moving Too Slowly

HMRC’s slow adoption of AI isn’t just a missed opportunity; it’s a risk to its mission. Tax evasion and fraud are evolving, with criminals leveraging AI to create sophisticated scams, from phishing to voice cloning. A 2025 government report on the safety and security risks of generative AI warns that criminals are adopting the technology at the same pace as the general population, amplifying threats like fraud and data harvesting. If HMRC doesn’t accelerate its AI capabilities, it risks being outmanoeuvred by those it seeks to regulate.

Moreover, the public expects more from government services in the digital age. Taxpayers, accustomed to seamless experiences from private-sector platforms, are frustrated by clunky processes and long wait times. AI could alleviate these pain points—scheduling appointments, personalising taxpayer support, or automating repetitive tasks to free up staff for complex cases. But every year HMRC delays, it erodes public trust and misses chances to improve service delivery.

Ethical Concerns and the Need for Speed

To its credit, HMRC is taking steps to address ethical concerns, with an AI Ethics Working Group overseeing mandatory processes and ensuring transparency. This cautious approach is necessary—AI misuse could lead to biased outcomes or privacy breaches, as highlighted by the Information Commissioner’s Office and the UK’s AI governance frameworks. However, caution shouldn’t mean paralysis. The private sector has shown it’s possible to balance innovation with ethical safeguards, and HMRC must learn to do the same.

The “landing zone” concept is a step toward safe AI adoption, but it’s telling that it’s framed as a starting point rather than a mature strategy. Other government bodies, like the Government Digital Service (GDS), have been experimenting with AI for years, with projects like the GOV.UK chatbot showing tangible results. HMRC’s delay in reaching this stage suggests a lack of agility, perhaps rooted in bureaucratic inertia or resource constraints.

A Call for Bold Action

HMRC’s “landing zone” is a sign of progress, but it’s not enough. To truly harness AI’s potential, HMRC must move beyond pilot projects and incremental training. It needs a comprehensive AI strategy that prioritises rapid deployment, workforce upskilling, and collaboration with private-sector innovators. The government’s broader AI Opportunities Action Plan, which aims to make the UK an “AI superpower,” sets an ambitious tone. HMRC must align with this vision, not trail behind it.

The UK has a proud history of technological leadership, from Alan Turing’s foundational work to modern AI pioneers like DeepMind. HMRC, as a critical public institution, has a responsibility to embody this legacy. The establishment of a “landing zone” is a start, but it’s time for HMRC to stop taxiing on the runway and take flight. The longer it delays, the further it falls behind in a world where AI is no longer the future—it’s the present. 


Tax does have to be taxing.


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Tuesday, 15 July 2025

Tax Dodger Honoured





 


Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"



Monday, 14 July 2025

HMRC’s £2 Million Blunder: A Scathing Indictment of Negligence and Incompetence


HM Revenue & Customs (HMRC) has once again proven itself to be a masterclass in bureaucratic ineptitude. According to a recent report by *The Telegraph*, HMRC employees have managed to lose or have stolen a staggering £2 million worth of taxpayer-funded laptops and mobile phones over the past five years. That’s right—£2 million of public money squandered on devices that have vanished into thin air, with roughly 10 mobile phones and two laptops disappearing every single week in the past year alone. This is not just a minor oversight; it’s a grotesque display of carelessness that demands accountability and exposes the rot at the heart of HMRC’s operations.

Let’s break this down. The replacement cost for these lost and stolen devices is estimated at £1.5 million, with an additional £386,000 spent on replacing stolen equipment. HMRC officials, in a feeble attempt to deflect blame, have suggested that these figures *might* be inflated because some equipment is “found at a later date.” Found where? Under a desk? In an employee’s living room? Or perhaps in the hands of someone exploiting sensitive taxpayer data? The vagueness of their excuse is as infuriating as it is unconvincing. Even if some devices miraculously reappear, the fact remains that thousands of gadgets—each potentially containing confidential information—have gone missing under HMRC’s watch. This isn’t just about money; it’s about the systemic failure to safeguard assets and data critical to the nation’s financial infrastructure.

The security implications are chilling. HMRC handles the personal and financial details of millions of UK taxpayers. A lost laptop or phone isn’t just a financial loss; it’s a potential gateway for cybercriminals to access sensitive information. The *Guardian* reported that across 18 Whitehall departments, including HMRC, over 2,000 devices worth £1.3 million annually have been lost or stolen, raising alarms about a “systemic risk” to cybersecurity. HMRC’s contribution to this debacle is particularly egregious, given its role as the steward of taxpayer data. How can an organisation tasked with collecting the funds that keep the UK running be so cavalier with equipment that could compromise national security? The answer, it seems, lies in a toxic cocktail of incompetence, understaffing, and a culture of indifference.

This scandal comes at a time when HMRC’s customer service is already in freefall. As *The Telegraph* noted, in 1995, HMRC answered 99% of calls within 15 minutes. Fast forward to 2024, and 63% of callers are left languishing for over 10 minutes before speaking to an advisor. This decline in service quality mirrors the agency’s apparent disregard for its own assets. Posts on X echo this sentiment, with former HMRC employees like @lizkenward lamenting the loss of resources, experienced staff, and local offices due to government cuts. @boblister_poole’s scathing remark that “most seem to work from home—who’s got them now, a relative?” captures the public’s growing suspicion that HMRC’s work-from-home policies may be exacerbating the problem. When devices are scattered across employees’ homes rather than secured in offices, the risk of loss or theft skyrockets.

But let’s not stop at the devices. HMRC’s track record is a litany of failures that compound this outrage. Just last year, the agency was defrauded of £47 million through phishing attacks that compromised 100,000 taxpayer accounts, as reported by *The Telegraph* and *BBC News*. HMRC insisted this wasn’t a “cyberattack” but rather “organised crime phishing,” as if that distinction absolves them of responsibility. Deputy Chief Executive Angela MacDonald called the loss “very unacceptable,” yet offered little in the way of concrete solutions. Meanwhile, @premnsikka on X has highlighted HMRC’s failure to collect between £500 billion and £1.4 trillion in taxes since 2010, alongside £38 billion in write-offs due to fraud and bad laws. The message is clear: HMRC is not just losing laptops; it’s losing control.

The root cause of this mess lies in a combination of chronic underfunding, poor management, and a lack of accountability. HMRC’s workforce has been gutted by years of government austerity, leaving it understaffed and undertrained, as @payling_trevor noted on X. The shift to remote work, while necessary during the pandemic, has exposed glaring weaknesses in asset management. Laptops and phones aren’t just handed out with a Post-it note saying “don’t lose me.” They require robust tracking systems, regular audits, and strict protocols—none of which HMRC seems capable of implementing. Instead, we’re left with a tax authority that treats taxpayer money like pocket change and sensitive data like an afterthought.

The public deserves better. HMRC must be held to account with immediate action: a comprehensive audit of all devices, mandatory encryption and remote-wipe capabilities for every piece of equipment, and severe penalties for employees who fail to secure assets. Heads should roll at the top—starting with those who allowed this culture of negligence to fester. The government, too, must answer for slashing HMRC’s resources to the bone while expecting it to function as a world-class institution. As @premnsikka rightly asked, why haven’t governments changed laws or improved enforcement to stem these losses? The silence is deafening.

In the end, HMRC’s £2 million device debacle is more than a financial misstep; it’s a symbol of an agency in disarray, stumbling from one scandal to the next while taxpayers foot the bill. The UK cannot afford to let this incompetence slide. It’s time for HMRC to stop losing laptops and start regaining the public’s trust. 


Tax does have to be taxing.



HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday, 7 July 2025

HMRC’s Secret Deals: A Scandalous Betrayal of Taxpayers and Justice


 

The recent revelation that HM Revenue and Customs (HMRC) quietly offered large corporations an 85% discount on tax liabilities tied to the notorious loan charge scandal, while ruthlessly pursuing individual contractors with life-ruining bills, is nothing short of a grotesque abuse of power. Documents uncovered through a Freedom of Information request, brought to light by Conservative MP Greg Smith during Treasury Questions, expose a deeply unequal and morally bankrupt approach by HMRC. This is not just bureaucratic incompetence—it’s a deliberate, systemic injustice that demands accountability and reform.

The Loan Charge Scandal: A Brief Recap

The loan charge, introduced in 2017, is a controversial tax policy targeting disguised remuneration schemes—arrangements where workers, often contractors, were paid via non-taxable loans instead of salaries. These schemes, dating back to the 1990s, were often marketed as HMRC-compliant by trusted tax advisers, luring approximately 50,000 self-employed workers into financial arrangements they believed were legitimate. HMRC, however, retroactively deemed these schemes tax avoidance, pursuing contractors for back taxes, interest, and penalties, often resulting in bills that dwarfed their earnings. Tragically, the policy has been linked to at least 10 suicides, with countless others driven to bankruptcy, depression, and despair.

The Smoking Gun: Secret Deals for the Powerful

The bombshell dropped via the FOI request reveals that in 2015, a year before the loan charge was introduced, HMRC struck clandestine settlement deals with multi-million-pound companies involved in these same payroll loan schemes. These corporations—often major players in banking and financial services—were allowed to settle their tax liabilities for a mere 15% of what was owed, effectively receiving an 85% discount. Meanwhile, individual contractors, many of whom were coerced or misled into these schemes, were offered no such leniency. Instead, they faced crushing demands for 100% of the alleged tax owed, plus interest and penalties, with some bills exceeding their total earnings from the period in question.

Ray McCann, a former HMRC assistant director and leader of the ongoing loan charge review, admitted in 2019 minutes with Lord Amyas Morse that these “generous” corporate settlements included “significant discounts” not extended to contractors. McCann himself called this disparity discriminatory, noting that “contractors weren’t offered these terms” and that “settlement opportunities have always had a discount, and contractor one is the only one that didn’t.” This admission is damning—a clear acknowledgment that HMRC knowingly treated small-scale contractors far more harshly than corporate giants.

A Tale of Two Taxpayers

The hypocrisy is staggering. Large companies, with armies of lawyers and accountants, were quietly let off the hook with sweetheart deals, while ordinary workers—IT consultants, nurses, teachers, and others—were hounded relentlessly. For example, one contractor earning £13,000 annually was slapped with a £250,000 tax bill, a sum so disproportionate it defies reason. Meanwhile, corporations that facilitated these schemes, reaping millions in profits, paid a fraction of their liability and walked away unscathed.

This double standard isn’t just unfair—it’s predatory. HMRC’s own rhetoric claims the loan charge is about “fairness for all taxpayers,” yet their actions tell a different story: one where the powerful are coddled, and the vulnerable are crushed. The Loan Charge Action Group’s Steve Packham put it bluntly: “Ten people have killed themselves as a direct result of HMRC’s ruthless persecution of people who the Chancellor herself has described as ‘victims of mis-selling’.” Yet, HMRC allowed corporate enablers to escape with a slap on the wrist.

HMRC’s Complicity and Inaction

HMRC’s defence—that it never approved these schemes and that settlements are based on “individual facts”—rings hollow. Many contractors entered these schemes in good faith, relying on assurances from tax advisers and promoters that they were compliant. HMRC failed to act on red flags, such as DOTAS (Disclosure of Tax Avoidance Schemes) registrations, allowing these arrangements to proliferate for years. When it finally moved, it targeted the easiest prey—individual contractors—while largely ignoring the promoters and employers who designed and profited from the schemes.

The 2019 Morse Review, which led to some reforms, including limiting the loan charge’s scope to post-2010 loans, was supposed to address these injustices. Yet, HMRC’s continued pursuit of pre-2010 cases through alternative mechanisms like s684 notices shows a refusal to let go, even when the law’s clarity at the time was questionable. This relentless hounding, coupled with the revelation of secret corporate deals, undermines any claim that HMRC operates with integrity or fairness.

A Call for Accountability

MPs and campaigners, including Sarah Olney of the Liberal Democrats and the Loan Charge and Taxpayer Fairness APPG, are rightly demanding answers. They’ve called for contractors to be offered the same 15% settlement terms as corporations and for a full, independent inquiry into HMRC’s conduct. The parallels with the Post Office Horizon scandal are undeniable: a government agency pursuing ordinary people with devastating consequences, while those truly responsible—promoters and corporate enablers—evade accountability.

HMRC’s actions are not just a failure of policy but a betrayal of public trust. The agency’s secrecy, its discriminatory treatment of taxpayers, and its refusal to pursue scheme promoters with the same zeal it applies to contractors reveal a rotten core. The government must act swiftly: offer contractors the same settlement terms as corporations, pause all loan charge enforcement pending the current review, and launch a root-and-branch investigation into HMRC’s practices. Anything less is complicity in a scandal that has already claimed lives and livelihoods.

Conclusion

The loan charge scandal is a stark reminder of what happens when power is wielded without accountability. HMRC’s secret deals with large companies, while punishing contractors with crippling bills, expose a tax system rigged to favor the powerful. The human cost—10 suicides, countless bankruptcies, and untold suffering—demands justice. It’s time for the government to stop hiding behind HMRC’s excuses and deliver fairness to the victims of this egregious miscarriage of justice. The call for an independent inquiry is not just warranted—it’s urgent.

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Tax does have to be taxing.


HMRC Is Shite (www.hmrcisshite.com), also available via the domain www.hmrconline.com, is brought to you by www.kenfrost.com "The Living Brand"

Monday, 30 June 2025

Fujitsu’s £280m HMRC Contracts: A Disgraceful Betrayal of Taxpayers Amid Post Office Scandal


 
 
In a move that has sparked outrage among campaigners, victims, and taxpayers alike, HM Revenue & Customs (HMRC) has signed off on two contracts worth a staggering £280 million with Fujitsu, the Japanese IT giant at the heart of the Post Office Horizon scandal. These contracts, described as “bridging” arrangements to maintain datacentre operations and self-assessment system hosting while HMRC transitions away from Fujitsu’s infrastructure, represent a continued reliance on a company responsible for one of the UK’s most egregious miscarriages of justice. The decision to funnel hundreds of millions in taxpayer money to Fujitsu, despite its role in ruining countless lives, is nothing short of disgraceful and raises serious questions about accountability and government priorities.
The Post Office Scandal: A National Disgrace
The Post Office Horizon scandal, widely regarded as the biggest miscarriage of justice in modern British history, saw more than 900 sub-postmasters wrongfully prosecuted between 1999 and 2015 due to faults in Fujitsu’s Horizon accounting software. The defective system falsely reported financial shortfalls, leading to convictions for theft and fraud, ruined livelihoods, imprisonment, and even suicides among innocent sub-postmasters. The human toll was catastrophic, with families torn apart and communities shattered, while Fujitsu and Post Office management evaded accountability for years.
 
Public outrage intensified following the 2024 ITV drama Mr Bates vs The Post Office, which brought renewed attention to the scandal. Fujitsu, acknowledging its “corporate responsibility,” pledged to suspend bidding for new UK government contracts until the ongoing public inquiry into the scandal concluded. Yet, despite this promise, the company continues to secure lucrative deals, with HMRC’s latest £280 million contracts being a glaring example of business as usual.
HMRC’s £280m Deal: A Slap in the Face to Victims
HMRC’s decision to award Fujitsu two contracts—one for datacentre operations and project services, and another for hosting applications on a virtual platform—has been met with fierce criticism. Campaigners and former sub-postmasters, including one who was imprisoned while pregnant due to Horizon’s errors, have called the move “truly wrong” and “an insult to victims and the inquiry itself.” Kevin Hollinrake, the former postal affairs minister, condemned the government, stating, “The least Labour could do is secure the interim payment that we pushed for whilst in office before pressing on with these multi-hundred million contracts. Anything less would be another betrayal of postmasters and the British taxpayer.”
 
The contracts, signed off as HMRC plans to transition away from Fujitsu’s datacentres, are framed as a necessary stopgap. A government spokesperson emphasised that the deals are “contingency measures” to ensure continuity while HMRC migrates to a cloud-based system managed by a hyperscaler. However, the justification rings hollow when taxpayers are footing a £280 million bill for a company that has yet to contribute meaningfully to compensation for Horizon victims. The inquiry, expected to release its initial report soon, has already cost taxpayers dearly, and the entire financial burden of compensating victims—estimated at over £1 billion—has fallen on the public purse.
Fujitsu’s Unbroken Grip on Taxpayer Funds
Fujitsu’s deep entrenchment in government contracts is a troubling reality. Despite its role in the Horizon scandal, the company has raked in billions from the UK government over the years. In 2022 alone, Fujitsu secured £430 million in government contracts, and last year, HMRC paid the firm £310 million. Posts on X reflect public frustration, with users like
@premnsikka
noting that Fujitsu “makes millions from govt contracts” while facing no penalties for its role in the scandal. Another user,
@paullewismoney
, highlighted a £500 million HMRC deal in 2022, calling it a reward for complicity in the Post Office cover-up.
 
The government’s reliance on Fujitsu stems from the complexity and risk of replacing entrenched IT suppliers in major public sector systems. HMRC’s “bridging” contracts are a testament to this dependency, as the department admitted that only Fujitsu can fulfil these roles during the transition period. This raises a broader issue: why has the government allowed itself to become so reliant on a single provider, especially one with a track record of catastrophic failure?
A Failure of Accountability
The decision to extend Fujitsu’s contracts comes at a time when the public inquiry is still investigating the company’s role in the Horizon scandal. MPs and peers, including Lord Bellingham, have demanded clarity on Fujitsu’s continued involvement in public sector contracts, particularly as the company has not yet contributed to victim compensation. The police investigation, Operation Olympos, has identified seven suspects and over 45 persons of interest, including Fujitsu management, but no prosecutions have materialised. This lack of accountability fuels public distrust, as Fujitsu continues to profit handsomely while victims fight for redress.
The government’s response has been inconsistent at best. Initially, officials claimed the HMRC contracts were part of a broader effort to “quickly and securely remove” Fujitsu from government systems, only to retract that statement and clarify that the goal applies only to HMRC’s transition. This flip-flopping undermines confidence in the government’s commitment to holding Fujitsu accountable. Meanwhile, the Business Secretary’s March 2025 meeting with Fujitsu to discuss victim compensation has yet to yield tangible results, leaving taxpayers to shoulder the financial burden.
A Call for Justice and Reform
The HMRC-Fujitsu contracts are a stark reminder of the government’s failure to prioritise justice over corporate convenience. Awarding £280 million to a company responsible for devastating lives is not just a pragmatic necessity—it’s a moral failing. The government must act swiftly to:
  1. Suspend Fujitsu Contracts: Halt all non-essential contracts with Fujitsu until the inquiry concludes and the company contributes significantly to victim compensation.
  2. Accelerate Decoupling: Invest in expediting the transition away from Fujitsu’s systems to reduce long-term dependency.
  3. Ensure Accountability: Support the police investigation and push for prosecutions of those responsible at Fujitsu and the Post Office.
  4. Compensate Victims: Streamline the redress process, which MPs have criticised as “too slow,” to ensure sub-postmasters receive the payouts they deserve without delay.
Conclusion
HMRC’s £280 million contracts with Fujitsu are a disgraceful continuation of a system that rewards failure while taxpayers and Horizon victims pay the price. The Post Office scandal exposed Fujitsu’s role in a national tragedy, yet the company continues to suck at the teat of public funds with impunity. As the inquiry progresses and public anger grows, the government must stop treating Fujitsu as an indispensable partner and start treating it as a corporate culprit that must be held to account. The British taxpayer—and the sub-postmasters who suffered for decades—deserve nothing less.



Tax does have to be taxing.



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