Why AI tax advice is so dangerous to your future

Artificial Intelligence (AI) is transforming the way we access information – but there should be strict limits when it comes to relying on AI for tax advice.

The UK tax system isn’t straightforward. When it comes to navigating complex tax disputes, HMRC investigations, tax assessments and penalties, the stakes are high and mistakes can come with hefty financial consequences.

As ex-HMRC investigators and specialist tax investigation advisers, we’ve seen first-hand the damage that can be done when individuals try to ‘DIY’ a HMRC defence.

The rise of AI in tax queries

Tools like ChatGPT are trained on vast datasets, enabling them to provide general information quickly and in plain English.

For example, if you search for “How do I appeal a tax assessment?”, you’ll probably get a good basic summary.

However, the UK tax code stretches over 17,000 pages. That complexity demands not just knowledge, but interpretation, which is where AI stumbles.

While it’s brilliant at sifting data, flagging inconsistencies, and providing general insights, it lacks one crucial asset: judgment.

Tax investigations are rarely black and white. They require strategy, understanding of precedent, and often a human ability to assess nuance.

Whether that’s reading between the lines of HMRC correspondence or negotiating a settlement.

AI can’t represent you in a meeting with HMRC or tailor arguments to evolving case dynamics.

When you’re faced with a HMRC investigation – whether it’s due to deliberate non-compliance, reliance on bad advice, or a genuine mistake – a strategy to resolving the dispute is key.

Unfortunately, that is where relying on AI will probably let you down.

When AI tax advice goes dangerously wrong

Consider the real-life case of Felicity Harber v HMRC [2023] UKFTT 1007 (TC).

The taxpayer, representing herself, submitted nine tax tribunal cases to support her argument against a Capital Gains Tax penalty.

There was just one problem: the cases weren’t real.

They had likely been fabricated by an AI tool, mimicking the style and structure of legitimate judgments but using American spellings (“favor” instead of “favour”), recycled phrasing, and case names that couldn’t be found in any official UK database.

The tribunal rightly took the matter seriously – not because Mrs Harber acted with intent to deceive, but because citing fake judgments undermines the integrity of legal proceedings.

Therein lies the danger. AI doesn’t know whether something is real – it predicts what sounds plausible.

These tools may sound confident, but they don’t verify, fact-check, or reason.

That’s inTax’s job.

Why human judgement still matters

There’s a big difference between asking, “How do I disclose my property income to HMRC?” and defending yourself in a Code of Practice 9 (COP9) investigation.

HMRC open COP9 investigations where it suspects serious tax fraud.

In return for protection from criminal investigation, HMRC offers individuals the opportunity to make a full disclosure under via the Contractual Disclosure Facility (CDF).

Get that wrong – or worse, submit fictitious arguments – and you could face prosecution.

Similarly, COP8 cases involving avoidance schemes or offshore structures require in-depth knowledge of tax legislation, case law, and a strategy.

AI tax advice can’t know your full financial position, can’t read the tone of an HMRC letter, and won’t tell you when to tread carefully and when to challenge HMRC’s position.

Only a qualified, experienced human adviser can:

• Assess the specific facts of your case
• Advise on tax investigation strategy
• Prepare legally accurate representations
• Challenge HMRC assessments with real case law
• Minimise reputational and financial damage

Why reputation, business and freedom are too valuable to gamble on AI tax advice

Tax disputes can escalate quickly – from compliance checks or VAT visits to cross-tax investigations, discovery assessments and tax-geared penalties.

HMRC has the power to publish details of deliberate tax defaulters.

Handled badly, tax investigations can result in bankruptcy and insolvency and individuals can be disqualified from being a company director.

In the most severe cases, HMRC can start a criminal investigation.

We do understand the appeal of AI tax advice – it’s fast, free, and available 24/7.

But that doesn’t make it safe or suitable for serious matters.

A final word of warning about AI tax advice

In Bodrul Zzaman v HMRC [2025] TC09520, the tribunal once again saw how AI-generated submissions failed to support a taxpayer’s case.

Although the citations were not fake, they were legally irrelevant.

Mr Zzaman’s appeal against a HMRC assessment was dismissed.

The tribunal noted that AI cannot understand the nuance of UK tax law, nor can it distinguish between persuasive precedent and speculative argument.

So, even when AI “got the law right,” it applied it in the wrong context.

We don’t think that’s intelligent enough!

If you need tax advice, don’t go straight to ChatGPT – speak to the professionals.

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email joe.mcdermott@intaxltd.com.

inTAX is a specialist tax disputes firm. We deal with disclosures, investigations, and tax enquiries of all descriptions, including COP9, fraud investigations, VAT fraud, tax avoidance, let property disclosures and tribunal appeals. However, we don’t just deal with the serious end of tax investigations; we are also happy to handle smaller enquiries, disputes and problems that can be equally as worrying for our clients