HM Revenue and Customs (HMRC) has signed a £175 million, 10-year partnership with London-based Quantexa to overhaul its data infrastructure, as the tax authority scrambles to recover billions lost to evasion and sophisticated fraud.
Massive Tech Deployment in Public Sector
The deal – one of the largest tech deployments in the public sector – is designed to fix the “fragmented” legacy systems that have long hampered HMRC’s ability to track the UK’s tax gap. With tax evasion estimated at £5.5 billion, and a further £47 billion in taxes going unpaid last year, the government is betting on a sovereign data foundation to replace outdated, disconnected silos.
The move marks a strategic shift toward domestic technology for national infrastructure, arriving amid a backdrop of rising sophisticated scams and a Treasury-led ‘Close the Tax Gap’ initiative. By building a unified data fabric, HMRC aims to unpick the complex webs of shell companies and directors used in multi-million-pound VAT and payroll frauds.
Quantexa Chief Executive's Vision
Quantexa chief executive Vishal Marria told City AM that the success of the government’s wider AI ambitions hinges entirely on cleaning up this underlying data mess.
“If you use AI straight onto fragmented data, you’re not going to get the outcomes you desire,” Marria said. “We are providing the underpinning and the foundation to the house. The data foundation is set in place for you to go and build whatever you want.”
Targeting ‘High Stakes’ Fraud Networks
The ten-year programme arrives at a pivotal moment for tax enforcement, with Rachel Reeves expected to launch a US-style whistleblower scheme this month which could offer informants up to 30 per cent of recovered funds. Quantexa’s platform will act as the filter for these tips, connecting billions of data points to identify “high-probability” targets that currently slip through the cracks.
HMRC paid out nearly £1 million in fraud tip-offs last year, a 92 per cent increase, while raids on suspected fraudsters reached a record 648. The Quantexa partnership aims to move beyond manual processing, using automation to resolve payments without references.
Marria insists this deployment is the only way to move government beyond the “experimentation phase” of AI into operational reality. “Governments around the world are facing a common challenge: how to turn complex, fragmented data into confident, timely decisions,” Marria told City AM. “This is a blueprint for how the UK government deploys AI at scale”.
Sovereign Oversight and the Trust Issue
Unlike other public sector data deals that have sparked privacy concerns over Big Tech access, Marria said that the Quantexa platform is deployed within HMRC’s own secure environment. The tax authority remains the “data controller”, he said, while the tech remains “explainable” for use in legal proceedings.
The City will be watching closely to see if the platform can deliver on the promised reduction of false positives. The goal is to move HMRC toward “riche investigations”, said Marria, targeting professional criminal networks rather than honest taxpayers caught in administrative errors.
“I don’t have access to their data,” Marria added. “This is HMRC’s data. We provide the transparency and the explainability… everything the platform does is fully auditable”.
With fraud losses hitting £629 million in the first half of 2025, the pressure is on for this £175 million investment to prove it can turn a decade of “garbage data” into a functional weapon for the Exchequer.
