Former top Treasury adviser warns that HMRC is close to tracking personal finances with AI
HMRC is on the verge of using AI to track people’s and businesses’ income and expenses without notice, a former senior Treasury adviser to Gordon Brown has warned.
Dr. Brown, who has been a member of Mr. Brown’s Council of Economic Advisers for more than six years. Chris Wales sounded the alarm as he launched a chilling book co-authored by international lawyer Robert Amsterdam about the behavior of the Spanish tax office: Agencia Tributaria.
He will join former Labor Treasurer Baroness Dawn Primarolo at an event next week to discuss how the Spanish model of tackling tax evasion is about to come to the UK, opening the door to a “surveillance state”.
In a preview of the future, Dr. Wales claimed privacy, not just in financial matters but also in personal life, would “go out the window” and asked whether there were sufficient safeguards in place in the UK to prevent HMRC from imitating its Spanish counterpart.
He said: “From January 1, every bill will go through the tax office in Spain. The inspector will already be able to get all your electricity bills and will soon find out which clinic and pharmacy you used and what you bought there, which restaurants you ate at, where you bought wine and groceries, what kind of car you had, how far you drove and where you parked, which flights you took and which hotels you used. Information security? It’s a thing of the past.”
He continued: “I’m far from a libertarian, but I see a huge danger in the direction the tax authority’s powers are going, especially since the process does not seem to involve our active consent. There is very little debate in parliament on this issue. In Spain the situation is completely out of control. Let’s look at the UK.”
Highlighting the CONNECT AI program currently used by HMRC in the UK, Dr. Wales claimed the UK was now close to following Spain’s lead.
He said: “HMRC has been using advanced information technology for years, including an artificial intelligence system called CONNECT, which is said to contain more than 55 billion taxpayer-related data elements as early as 2023.
“The ability to quickly parse these billions of pieces of information about taxpayers by AI will be much greater today.”
Currently a senior research advisor at the Center for International Tax and Development, Dr. Wales added that HMRC also refused to say what algorithms it used, citing the excuse that people would “game the system” if you published them; argues that this claim does not stand up to scrutiny.
“It appears that the system is being used to target evasion. For the tax authorities, everyone is a potential tax evader. This means they believe they have a legitimate reason to collect data on all of us,” he said.
Dr Wales and Baroness Primarolo will call on MPs in the UK to take a greater stand and engage in greater scrutiny than in Spain.
He stated that the Spanish government is trying to introduce a new law, trying to make it an official secret, how the data is used, what algorithms are used to select taxpayers for the investigation and whether any investigation has been carried out by an official in clear contravention of the EU Artificial Intelligence Law, the GDPR and its own Constitution. “This is, of course, a matter of deep concern. When the reasons for decisions are not known, legal appeal becomes almost impossible.”
In Spain, the system is already being used by authorities against British immigrants and others.
An HMRC spokesman said: “Our data and collection powers are set by Parliament and are subject to strict legal safeguards, surveillance and data protection laws. These exist to ensure we can collect the right tax to fund vital public services and target error and fraud to minimize interference with the honest majority.”
“AI supports some of our processes, but it never replaces human decision-making and oversight. We remain committed to the safe use of these technologies, supported by stringent data protection, security and ethical standards.”
