New rule lets HMRC snoop on taxpayers’ AI chat history – what you need to know

Résumé détaillé

People who use AI to help with their taxes could find their conversations coming under scrutiny as HMRC expands its powers to inspect digital records. Taxpayers who use tools such…

People who use AI to help with their taxes could find their conversations coming under scrutiny as HMRC expands its powers to inspect digital records.

Taxpayers who use tools such as ChatGPT could be affected by the proposed changes, which will see HMRC increase the access it has to online records to determine if people have paid the right amount of tax.

Those who fail to respond to HMRC’s information requests could be hit with an initial fine of £300, rising to £3,000 for people who don’t report inaccuracies.

The move has raised concerns about how much access HMRC could have to people’s private online conversations, with the TaxPayers’ Alliance warning that it would be an invasion of privacy.

There are a growing number of people who use AI to help with their taxes. Someone who is self-employed, for example, might ask a tool which expenses they can claim, while a landlord might use it to understand the tax implications of rental income.

The Government’s proposals are designed to update HMRC’s existing powers so it can access relevant records held in digital systems, including information about how financial figures have been calculated.

However, it does not mean HMRC will automatically be able to read everyone’s private chatbot conversations.

HMRC must have a lawful basis to request information, and it must be reasonably required to check someone’s tax position.

David Stirling, director and financial adviser at Mint Wealth, said taxpayers should remember that information entered into AI tools could become relevant if HMRC investigates how their tax figures were produced.

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