EXCL: HMRC expands guidance to allow for use of automated decisions to help ‘determine benefits, credits, penalties and charges’


The department has updated its privacy notice and added significant new sections concerning the use of AI and automation where it is ‘necessary and proportionate’ in delivering taxation and benefits

HM Revenue and Customs has updated its formal privacy guidance and added allowances for the use of automated decision-making tools to help “determine benefits, credits… penalties and charges” issued by the department.

The document – which sets out the rules and processes governing how the department gathers the personal information of citizens and how this data is then used – was updated last week.

This included significant amendments to the policy’s existing section on “automated decision-making”, which outlines the instances in which HMRC is permitted to deploy an “electronic system [which] uses personal information to make a decision without human intervention”.

Previously, these allowances were limited to cases in which the affected individual had given their explicit consent, or where they had been “notified of the decision and given… 30 days to request a reconsideration or a new decision not based solely on automated processing”.

“Automated decision-making takes place when an electronic system uses personal information to make a decision without human intervention. We are allowed to use automated decision-making in… where HMRC is authorised by law under our statutory powers, [which] includes where it is necessary and proportionate for the purposes of the assessment and collection of taxes or duties or determining benefits and credits.”

Updated HMRC privacy notice

While these provisions remain in place – including mechanisms for appealing a decision within 30 days – the notice now specifies that fully automated decisions can be made in any instance “where HMRC is authorised by law under our statutory powers” to do so.

New text added to the notice states: “This includes where it is necessary and proportionate for the purposes of the assessment and collection of taxes or duties or determining benefits and credits — for instance, in some circumstances HMRC uses automated processing to generate penalties and changes to notices of coding.”

The document also outlines that automated decision-making can be deployed by the department “if it is necessary to enter into or perform a contract with you”.

In another tweak to this section, HMRC has removed the previous stipulation that “you’ll not be subject to decisions that will have a significant impact on you based solely on automated decision-making, unless we have a lawful basis for doing so”.

The public is, instead, advised that: “If you are subject to an automated decision, we have appropriate measures in place to safeguard your rights. You will be notified in writing at the time, including the reasons for the decision and any associated consequences.”

In addition to the changes made to this section, the updated privacy notice now also included an entirely new segment headed: “Artificial Intelligence, analytics and machine learning”.

The section reads: “HMRC will only use AI, including analytics and machine learning where the law allows us for the purposes of the assessment or collection of a tax or duty, or the prevention or detection of crime. AI helps us learn more about large amounts of data, improve our customer services and prevent and respond to non-compliance amongst our customers. When buying or developing and deploying systems that involve AI and processing personal data, HMRC complies with our data protection, security, and ethical professional standards. HMRCs use of AI does not replace human judgement when collecting taxes or determining benefits, and our customer services processes always involve human agents.”

Improve our services
In addition to such commitments to keep a human employee “in the loop” for any AI-based decisions or processes, PublicTechnology understands that HMRC also intends to ensure that all such decisions are “explainable” to those that might be affected.

The department also indicated that – in various ways, shapes, and forms – it has used AI for “many years”, to support operations in areas including the analysis of documents, predicting the risk of customers falling into debt, managing contact from service users, and targeting compliance activities.

These deployments are supported by ethics and assurance frameworks, which are developed and tested by HMRC’s Professional Standards Committee, it is understood.

In response to our enquiries, a spokesperson for the department: “We’ve updated our privacy notice to make clearer for customers how we are safeguarding their individual rights when we use automated decision-making and AI techniques to improve our services.”

Sam Trendall

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