The UK tax department is increasing its use of technology and AI-driven 'nudges' to improve tax compliance. This involves using data and technology to make tax compliance more automated and voluntary. The department plans to increase interaction with taxpayers through emails and text messages, leveraging AI to analyse data, identify risks, and offer real-time prompts to taxpayers completing online returns. This strategy aims to reduce compliance costs and improve the efficiency of the tax system by encouraging taxpayers to correct mistakes before submission.
AI is also being used internally to process large volumes of data, detect fraud, and improve service delivery through virtual assistants and personalised services. The tax authority is keen to strike a balance between increasing productivity and safeguarding taxpayer rights, particularly data protection. They are applying the OECD definition of AI and ensuring ethical use, while also protecting systems from external fraud and cyber attacks.
Experts believe that AI offers unprecedented opportunities for increasing the efficiency and effectiveness of tax administration and tax enforcement.
