A leading tax expert has warned that Britons' lives could be wrecked if the use of Artificial Intelligence by tax authorities is not strictly regulated. Chris Wales, a former member of the Treasury's council of economic advisers, has called for an “end to secrecy” and is pushing for an independent audit of HMRC's use of AI, along with safeguards to protect citizens.
Call for Transparency and Safeguards
Wales has sounded the alarm about the potential for vast amounts of information about the private lives of citizens to be sifted by AI and potentially abused. “We have a right to know how much of our lives they're digging into,” he said. A priority is ensuring that AI algorithms are open to outside scrutiny, and he argues it is vital that taxpayers are able to challenge their selection for an audit.
Pushing for “limits” and “controls,” he said: “I think very soon the tax authorities are going to know vastly more about us than we could ever have imagined.” He is alarmed by the use of “punishment audits” in other countries against people accused of “stepping out of line” and wants high standards of transparency and oversight established to ensure the latest technology is not misused in the UK.
Risks of Abuse and Civil Liberties
Wales said: “I’m not in any way suggesting that people who avoid or evade taxes should not be subject to a lot of scrutiny and brought to light. What I'm saying is that in some countries it goes beyond that, and taxpayers get coerced into paying taxes that are actually not due.” He also warns that people could be exposed to risks of kidnapping and blackmail if intimate details about their spending activities fall into the wrong hands.
The tax expert is concerned by how a “less benign” Government could greatly expand the use of AI technology and threaten civil liberties. He said: “If they're able to get hold of credit card transaction data, as they are in many countries, then they can pretty much find out everything that every individual spends money on – whether it's a hotel or a clinic or your local wine store.”
International Concerns and HMRC Response
Wales does not believe that “politically motivated audits” take place in the UK but described the abuse of the tax system in certain countries, stating: “If you're a senior executive in a company that the government has an interest in and you've voted against something that the government wants to happen, they can select you for audit. And then you go through a horrendous process.” He added: “I think we need an end to secrecy. I think we need much more transparency in the use of AI, and I think courts need to be put in a position to [deal] properly with a challenge by a taxpayer to an intrusion into their private lives.”
Wales is a strong critic of Spain’s approach to taxation and, together with international lawyer Robert Amsterdam, has authored a “call to action to protect taxpayers’ rights,” titled The Hacienda and the Dual State.
An HMRC spokesperson said: “Our data and collection powers are set by Parliament and subject to strict legal safeguards, oversight and data protection laws. They exist so we can collect the right tax to fund vital public services, and target error and fraud in a way which minimises intrusion on the honest majority. Artificial intelligence supports some of our processes but never replaces human decision-making and oversight. We remain committed to the safe use of these technologies, underpinned by strict data protection, security and ethical standards. The use of AI does not change taxpayer’s rights or HMRC’s legal obligations.”
