Emma Rawson
Technical Officer, the Association of Taxation Technicians
The use of technology in tax is nothing new, but the rise of artificial intelligence (AI) has the potential to revolutionise the way we do things.
Tax and technology have gone hand-in-hand for some time, with most taxpayers filing returns online and interacting digitally with HMRC. Tax practices are already harnessing the technology to improve efficiency. Using AI for routine or repetitive tasks, and for extracting and analysing data, frees up time to focus on value-added work like advice and decision-making.
Benefits of AI in tax
As the technology evolves and develops, these opportunities may be extended. Could we see decision-making being carried out by AI, with firms using it to provide tax advice? Tax is, at heart, rules-based; and some AI systems can access large volumes of data, so it could potentially analyse relevant legislation and case law with ease.
Taxpayers themselves may be able to use AI to automate tax return preparation and filing. Tax authorities could also utilise AI to spot anomalies and detect fraud, leading to more focused and efficient compliance work.
Could we see decision-making being carried out
by AI, with firms using it to provide tax advice?
What are the risks of AI?
While we look to grasp these opportunities, we shouldn’t be blind to the accompanying challenges and risks. AI can be very accurate and produce better outputs than humans, but not always. Its dependence on existing data may create difficulties when addressing complex or novel situations.
Overlaying ethical concerns — a key issue for tax advice — could also be problematic. Ultimately, taxpayers remain responsible for their tax returns, and HMRC is unlikely to accept reliance on AI as an excuse for inaccuracies. Careful and critical checking of AI outputs and algorithms (where possible) will therefore be important. Data protection is also a challenge; how can tax authorities ensure taxpayer confidentiality is maintained with the use of AI systems?
The way forward in tax and AI
The tax profession will need to evolve in line with the technology, with skills such as professional scepticism, empathy and communication becoming more important. The challenge is how to build and future-proof these skills while maintaining quality of work.
Ultimately, it’s unclear exactly how AI will develop in the next 5, 10 or 20 years and how this will affect the world of tax. However, given the current pace of change, businesses, advisers and HMRC all need to be willing to adapt to seize the opportunities while keeping a watchful eye on the risks.