4 reasons to avoid using AI for tax advice

We’re used to the idea that artificial intelligence (AI) has numerous ways to help us run a streamlined and efficient small business. AI can automate many of our low-level processes, help with customer service and give us amazing insights into our business data.

But there’s one key area where using AI is a no-no – tax advice!

A recent survey by Taxfix revealed that more than half (59%) of Brits admit that they’ll use AI to help with their tax return in the run-up to HMRC’s 31st January deadline.

Let’s look at why you should avoid using AI tools, like ChatGPT, to answer complex tax questions. And why your accountant, or tax adviser, is the person to talk to.

1. Tax is a complex and nuanced area

Understanding the full UK tax code and how it applies to your specific situation is complicated. Giving the right answer requires the AI to know a number of variables about your tax position that are unlikely to be included in your prompt to ChatGPT.

2. Tax rules are specific to your country and tax position

The tax rules that apply to you, as a UK taxpayer or UK business, are specific to the current tax legislation created by the UK parliament and upheld by HM Revenue & Customs (HMRC). ChatGPT can be America-centric in its responses, so it’s likely that you’ll get answers that reflect US tax law, unless you’re specific about being a UK taxpayer in your prompt.

3. AI often provides incorrect answers or ‘hallucinations’

Generative AI has a habit of giving you the answer it thinks you want, rather than an answer that is factually correct. These AI hallucinations can sound extremely convincing and plausible, so you won’t be aware that this is false information until your tax adviser points out the error.

4. Tax professionals give you informed, human advice

Tax advice isn’t just about knowing the current rules around tax. As experienced, human, professionals, your tax adviser can give you answers that are tied to your own specific tax position and financial situation. In short, a human tax adviser gives you tailored, bespoke advice, whereas an AI will always give you generic, non-specific advice.

The rules around tax are clear, immovable and non-negotiable. But a good tax adviser will help you to plan your tax efficiently, taking into account any available tax incentives and claiming back tax-deductible items that will help your cashflow.

Accountants and tax professionals know the huge benefits that AI can bring to your business as an operational tool. But, as an industry, we also know the risks of AI-generated tax advice.

If you’ve got a tax query, or want help with your upcoming tax return, come and talk to the professionals in our team. We’ll be glad to help!

For advice about Accounting, Probate Law and Taxation; call our team

on 0203 488 7503, 01992 236 110 or contact us by email at  welcome@walshwestcca.com, legal@walshwestlaw.com or via our website www.walshwestcca.com