The short version
HMRC will be able to request records of taxpayers’ AI chatbot conversations under new Finance Bill powers.
What happened
The authority can issue a Schedule 36 notice to demand personal data, and a non‑response may attract an initial £300 fine.
Taxpayers who do not correct inaccurate information could face a penalty of up to £3,000.
The background
HMRC already has powers to request digital records when it has a legitimate reason to check tax payments.
The Finance Bill aims to expand those powers so they cover any digital record that might be relevant, which commentators say includes AI‑generated content.
Legal experts warn that AI conversations are conversational and could unintentionally contain advice that appears to show intent to evade tax.
What it means for owners and operators
Business owners who use AI chatbots for tax advice may create a permanent record that HMRC can request.
If the record suggests questionable tax arrangements, it could be used as evidence in an investigation.
Operators should treat AI tax advice as a risk and consider directing staff to qualified tax lawyers instead.
The numbers
A Schedule 36 notice that is ignored can bring an initial fine of £300.
What to do in your business tomorrow
- Review any recent AI chatbot conversations about tax and flag them for your finance team.
- Update internal policies to require tax queries to go through a qualified tax professional.
- Set up a log of all digital tax‑related communications to ensure you can produce them if HMRC asks.
Related coverage
Sources
- cityam.com: Hire a lawyer, don’t ask AI: Taxpayers warned as HMRC set to snoop on chat logs
- City A.M.: Hire a lawyer, don’t ask AI: Taxpayers warned as HMRC set to snoop on chat logs