HMRC Could Ask How AI Worked Out Your Tax: What It Means

Tax Queen

Tax Expert @ Pie

3 min read

What You Need to Know

This change won't affect your tax bill or your filing deadlines. It changes what HMRC can ask to see if it checks your return. That may soon include how you worked out your figures and any software or automated tools you used.

What you need to do is simple. Make sure you can explain every figure on your return yourself, and keep the records that back it up. Our guide to how HMRC compliance checks work explains the process and your rights.

What Is Changing with HMRC's Information Powers

HMRC can already ask for computer records when it's checking whether someone has paid the right amount of tax. These are called information powers, which means HMRC's legal right to ask you, or others, for documents and data.

Under changes reported to come into force in May, HMRC could also look at how tax figures were produced, including the software and automated systems behind them. [Editor Note: Unverified date - check the commencement date and year against HMRC guidance] Software providers and AI platforms could also be asked to share information about taxpayers.

HMRC has said this isn't about going through everyone's use of AI chat tools. It says it can only ask for information where it already has a lawful basis to do so.

Penalties If You Don't Respond

According to the source, if you don't respond to an HMRC request for information, you could be fined £300. Not reporting inaccuracies could cost you up to £3,000. [Editor Note: Unverified figure - check against HMRC guidance]

Knowing the common red flags that can trigger an HMRC investigation can help you avoid being asked in the first place.

What This Means for Your Records

If you use an AI chatbot to check whether an expense is allowable (a business cost you can take off your income before tax is worked out), treat it as a helper, not the final word. Always check its answer against HMRC's own guidance.

Keep receipts, invoices and bank statements, and note where each total on your return came from. You are still the person who signs off the return, so the responsibility stays with you whatever tool you use.

Clear records also make your bill easier to plan for. The 31 January deadline for 2025-26 returns is getting closer, and our guide to budgeting for your Self Assessment tax bill can help you set money aside in good time.

Making Your Figures Easy to Explain

The safest approach is a clear trail from each payment and receipt to the totals on your return. Then, if HMRC ever asks how you got a number, you can show it quickly instead of searching through old chats.

For sole traders, landlords and freelancers, self-assessment software like Pie Tax pulls in your income and sorts your allowable expenses, so you can see where every number on your return comes from.

Sorting out your 2025-26 records now means there's less to explain later. Try Pie Tax for free and start with this month's receipts.