[AI]How SAP is modernising HMRC’s tax infrastructure with AI

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HMRC has selected

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to overhaul its core revenue systems and place AI at the centre of the ***’s tax administration strategy.

The contract represents a broader shift in how public sector bodies approach automation. Rather than layering AI tools over legacy infrastructure, HMRC is replacing the underlying architecture to support machine learning and automated decision-making natively.

The AI-powered modernisation effort focuses on the Enterprise Tax Management Platform (ETMP), the technological backbone responsible for managing over £800 billion in annual tax revenue and which currently supports over 45 tax regimes. By migrating this infrastructure to a managed cloud environment via RISE with SAP, HMRC aims to simplify a complex technology landscape that tens of thousands of staff rely on daily.

Effective machine learning requires

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, which are often impossible to maintain across fragmented on-premise legacy systems. As part of the deployment, HMRC will implement SAP Business Technology Platform and AI capabilities. These tools are designed to surface insights faster and automate processes across tax administration.

SAP Sovereign Cloud meets local AI adoption requirements

Deploying AI in such highly-regulated sectors requires strict data governance. HMRC will host these new capabilities on SAP’s *** Sovereign Cloud. This ensures that while the tax authority adopts commercial AI tools, it adheres to localised requirements regarding data residency, security, and compliance.

“Large-scale public systems like those delivered by HMRC must operate reliably at national scale while adapting to changing demands,” said Leila Romane, Managing Director UKI at SAP.

“By modernising one of the ***’s most important platforms and hosting it on a *** sovereign cloud, we are helping to strengthen the resilience, security, and sustainability of critical national infrastructure.”

Using AI to modernise tax infrastructure

The modernisation ultimately aims to reduce friction in taxpayer interactions. SAP and HMRC will work together to define new AI capabilities specifically aimed at improving taxpayer experiences and enhancing decision-making.

For enterprise leaders, the lesson here is the link between data accessibility and operational value. The collaboration provides HMRC employees with better access to analytical data and an improved user interface. This structure supports greater confidence in real-time analysis and reporting; allowing for more responsive and transparent experiences for taxpayers.

The SAP project illustrates that AI adoption is an infrastructure challenge as much as a software one. HMRC’s approach involves securing a sovereign cloud foundation before attempting to scale automation. For executives, this underscores the need to address technical debt and data sovereignty to enable effective AI implementation in areas as regulated as tax and finance.

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