Mark McLaughlin ponders whether artificial intelligence is a help to taxpayers or a potential hindrance.
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Most people will at least be aware of artificial intelligence (AI), and some will already be using AI tools such as ChatGPT and Microsoft Copilot to ask questions or request tasks.
Here, there, and everywhere
In fact, some individuals who do not consider themselves to be ‘tech savvy’ might be using AI in their everyday lives without being consciously aware – such as chatbots and virtual assistants on websites, email spam detection, or facial recognition on mobile phones.
It would therefore be helpful to understand AI’s potential applications and present limitations. This article does not cover the technology underpinning AI, but instead focuses on the practical uses of AI in the tax world.
What is it?
In essence, AI is the broad and evolving field of computer science dedicated to developing machines and software that can perform tasks typically requiring human intelligence (e.g., speech recognition, image interpretation, decision making, and problem solving). AI is integrated into Microsoft products like Bing and Edge.
However, the true power of AI is in its ability to continually learn, adapt and perform tasks that previously could only be performed by humans.
Tax and AI
AI is becoming increasingly prominent in tax work. For example, HM Revenue and Customs (HMRC) operates a digital assistant (‘ask HMRC online’) aimed at taxpayers seeking help and advice with their tax affairs (www.tax.service.gov.uk/ask-hmrc/chat/online-services-helpdesk). HMRC also uses AI to analyse behavioural patterns among taxpayers, with a view to mitigating tax loss.
In addition, many UK taxpayers use general-purpose AI tools such as those mentioned above to help understand HMRC communications (e.g., letters and notices) search for the possible availability of tax deductions, reliefs and allowances, and check whether income sources are taxable. Taxpayers are also reportedly using AI-powered tax software to assist with the completion of their tax returns.
Some tax advisers no doubt use AI tools to help identify tax risks and planning opportunities for their clients. Furthermore, several tax publishers offer AI product subscriptions to assist professional firms with tax research, writing client communications (e.g., reports), and preparing tax documents.
Not so fast…
However, the use of AI by taxpayers and tax advisers is not without risks. AI has only been around for a relatively short time (e.g., ChatGPT was launched on 30 November 2022) and is still evolving. AI is not foolproof at present. For example, the dangers of complete reliance on AI research have been highlighted in several tax cases (e.g., Harber v HMRC [2023] UKFTT 1007 (TC); HMRC v Gunnarson [2025] UKUT 00247 (TCC)).
The use of AI should be used with extreme caution, particularly when interpreting ‘grey areas’ of UK tax law; such advice might seem authoritative on the face of it, but on checking, it might be based on ‘hallucinated’ tax legislation and case law. The verification by tax professionals of AI-generated advice is essential. HMRC considers that responsibility for accuracy always remains with the taxpayer, irrespective of any AI errors.
In short, AI is a potentially useful support tool when dealing with tax matters. However, it is not safe without human intervention and checking, and (for now, at least) is no substitute for professional judgment, advice and assistance from tax advisers.
Practical tip
Future articles in the monthly Tax Insider publications will highlight the possible applications of AI for tax purposes and the potential pitfalls of over-reliance on AI in greater detail.
