TL;DR

Planned changes to HMRC’s information powers could let the tax authority ask for the AI chatbot conversations people used to work out their tax, the Telegraph reported on Wednesday 11 November. The Budget Bill widens what HMRC can demand from computer “records” to any “relevant thing”. HMRC says the update reflects digital record-keeping and is not a trawl through everyone’s chatbot use.

What is changing

Today HMRC can use a Schedule 36 notice to obtain computer records when it believes they are required to test whether the right tax was paid. The Bill broadens that definition, and the Telegraph expects it on the statute book before June. HMRC has also signalled interest in the method behind a figure, including where software or an automated process calculated it.

Third parties come into scope too. According to both the Telegraph and the Independent, software firms and AI services may also be required to share what they hold on taxpayers. Failing to answer an information request carries an initial £300 penalty, and failing to report inaccuracies can cost up to £3,000.

Why advisers are asking about chatbots

The chat-history question is an inference from HMRC’s wording, not a stated aim. Blick Rothenberg’s Nimesh Shah wondered whether prompts, AI-drafted workings and agent logs in Copilot, ChatGPT or Claude “could become disclosable” when they underpin a return. The Taxpayers’ Alliance’s Anne Strickland called requests for private AI conversations “a deeply intrusive overreach by the taxman”.

An HMRC spokesman said the change updates existing powers “to reflect how tax information is now stored and processed digitally”, adding: “We can only request information where we already have a lawful basis to do so.” Notices can still be challenged where HMRC cannot show a “reasonable” need.

Why it matters

Plenty of businesses already use AI on tax. The Telegraph cites a September poll from the Administrative Burdens Advisory Board (ABAB): over 30pc of businesses had put a tax question to a chatbot like Copilot or ChatGPT. In our view the practical point for UK firms and advisers is record-keeping: if a chatbot helped produce a figure, the conversation may become part of the paper trail behind the return.

Looking Forward

The detail will matter more than the headline. Watch for HMRC guidance on what counts as a “relevant thing” once the Bill passes, and on whether third-party AI providers will receive notices directly.