HMRC has awarded a £175 million, ten-year AI contract to London-based Quantexa to modernise its data infrastructure and deploy AI for tax fraud detection and compliance. The deal is notable as a deliberate shift toward British AI sovereignty, contrasting with over £900 million in contracts previously awarded to American firm Palantir. Quantexa's Decision Intelligence platform uses entity resolution, graph analytics, and machine learning to connect fragmented datasets and identify fraud patterns across millions of tax returns. The contract covers three areas: data infrastructure modernisation, AI-driven fraud and evasion detection, and AI-assisted customer service. HMRC's tax gap stands at £46.8 billion, and the government aims to recover an additional £10 billion per year by 2030. All HMRC data will remain within HMRC's own environment, and automated decisions will require human oversight. The deal is seen as a test case for whether British AI companies can win major government contracts over American incumbents.
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