Hire a lawyer, don’t ask AI: Taxpayers warned as HMRC set to snoop on chat logs
HMRC’s powers to probe digital records are set to increase under newly proposed rules, as the tax authority will soon be able to view the chat histories of AI chatbots taxpayers use for tax questions. The tax authority currently has powers to request and obtain copies of digital “records” if it has a legitimate reason [...]
The UK's HMRC is planning to broaden its powers to access digital records, including chat logs from AI tax assistance tools, as part of new legislation set to become law next year. Currently, HMRC can request digital records if there is a legitimate reason to verify a taxpayer's tax compliance. However, the proposed changes under the Finance Bill would extend this authority to "relevant" digital records, potentially encompassing AI-generated tax advice.
This shift would also necessitate third-party platforms to share tax-related information held by them with HMRC. Matthew Holman of Cripps warns that taxpayers relying on AI for tax queries may unintentionally provide information that could be seen as evidence of tax evasion. Legal experts express concerns about data protection implications and the potential for HMRC to access sensitive AI conversations.
Critics argue that these expanded powers represent an intrusive overreach into citizens' private digital communications. HMRC maintains that the changes are aimed at updating existing information access powers to accommodate modern digital storage and processing practices, without suggesting that AI logs specifically will be targeted.
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