Tax authority’s new powers spark privacy debates as investigations target online posts
HMRC is harnessing artificial intelligence to trawl through social media posts, online marketplaces, and websites to identify tax evaders, raising concerns about privacy and the scope of digital surveillance.
HM Revenue & Customs (HMRC) is leveraging artificial intelligence to scrutinize social media profiles, eBay listings, and other online platforms in a bid to catch tax dodgers, prompting warnings from experts about potential invasions of privacy.
Enhanced Digital Surveillance AI-Powered Investigations
HMRC has confirmed it is using AI tools to analyze publicly available data on platforms like Instagram, X, and eBay to detect discrepancies between individuals’ online activities and their tax declarations.
For instance, someone claiming low income but showcasing a lavish lifestyle on social media could trigger an investigation. The technology scans posts, images, and sales data to identify signs of unreported income, such as frequent high-value transactions on second-hand marketplaces.
Legal Framework
Under new powers granted in the Spring Budget 2025, HMRC can now demand information from platforms like Airbnb, Fiverr, and Upwork to track earnings from side hustles and short-term rentals.
Previously, only tax evaders with offshore accounts were subject to such scrutiny. The updated rules require online platforms to report user earnings to HMRC, closing loopholes for undeclared income.
HMRC insists it only accesses publicly available data and complies with UK privacy laws, including GDPR.
Privacy Concerns Risk of Overreach
Tax experts and privacy advocates have raised alarms about HMRC’s AI-driven approach. Andy Wood of Tax Natives warned that the “intrusive” use of AI could lead to errors, as algorithms may misinterpret innocent posts—like a photo of a luxury car that belongs to someone else—as evidence of tax evasion. “AI isn’t foolproof; it could unfairly flag honest taxpayers,” Wood told This is Money.
Posts on X echo these concerns, with users questioning the ethics of digital snooping ().
Public Trust at Stake
The scale of data collection, which includes tax records, bank details, and now social media activity, has sparked fears of excessive surveillance.
While 2024-25 annual report shows £36.9 billion recovered from tax evasion, up from £34 billion the previous year, critics argue that AI monitoring risks eroding public trust. “People may feel their privacy is being violated,” said Sarah Patel, a privacy advocate at Digital Rights UK, emphasizing the need for transparent guidelines.
Targeting Tax Dodgers Focus on Side Hustles
The crackdown targets the growing gig economy, where platforms like Etsy and Vinted have made side hustles common. New rules mandate that these platforms report user earnings, with a £1,000 tax-free allowance for trading and property income before tax is due.
In 2024, HMRC issued 1,000 nudge letters to Vinted users suspected of underreporting earnings, urging them to review their tax obligations. Non-compliance can lead to fines up to 100% of unpaid tax, or criminal prosecution in severe cases.
Offshore and Online Sellers
The AI tools also enhance HMRC’s ability to pursue offshore tax evaders, building on existing powers to access bank data. Online sellers, particularly those on eBay and Depop, face increased scrutiny as HMRC cross-references sales data with tax returns.
“If you’re selling regularly online, you’re running a business and must declare it,” an HMRC spokesperson said, highlighting the agency’s focus on closing tax gaps.
Broader Implications Balancing Enforcement and Privacy
HMRC’s use of AI reflects a broader 2025 trend of leveraging technology for governance, seen in policies like Denmark’s AI deepfake law () and the UK’s data centre boom ().
However, the approach raises ethical questions about surveillance, especially as a 2025 MIT study warns that over-reliance on AI could reduce critical thinking (). “HMRC must ensure its AI is accurate and respects privacy,” said tech analyst Dr. Emily Chen, urging robust oversight.
Economic and Social Impact
The crackdown aims to recover billions in unpaid taxes, supporting public services, but risks alienating taxpayers if perceived as overzealous.
Social media discussions on X highlight a divide: some support HMRC’s efforts to curb evasion, while others fear it targets small-scale sellers unfairly. As digital economies grow, HMRC’s strategy could set a precedent for global tax authorities navigating the intersection of technology and compliance.
This article is based on a report by Jessica Clark, published by This is Money on August 14, 2025, updated at 22:31 on the same day. Additional context was drawn from posts on X discussing HMRC’s AI use and privacy concerns.
