Artificial Intelligence (AI) is a brilliant tool for any business to take advantage of as it can help automate certain tasks to streamline small businesses. However, AI is not infallible and there is a major area where advice should not be used…… tax advice!
In a recent survey by Taxfix it was revealed that 59% of Brits have admitted to using, or will be using AI to help with tax returns in the run up to 31 January. While this might sound like a great idea and even might save a bit of money on getting a tax adviser, it’s not as good as it sounds and that little saving could cost you £1,000’s in the long run.
We have highlighted what we feel are the major pitfalls in using AI when it comes to tax.
- Tax is complex and nuanced. Understanding the complexities of UK tax isn’t always straightforward, there are a lot of caveats and odd rules in the tax system. These can leave many grey areas where the answers aren’t necessarily black and white. Even without this each individual’s situation is different, and what might be correct for one person isn’t correct for you. This means unless you know exactly what to put into ChatGPT in the first place you are most likely going to be given an incorrect answer.
- It might not pick up the correct tax rules. Most AI tends to be America-centric, meaning that it will automatically default back to US laws (in this case tax law). So, unless you are very specific about being a UK taxpayer you might get advice based on US tax law. Even if you get past this hurdle the advice you get might still be incorrect, as it will tend to give generic advice rather than your specific situation.
- AI can sometimes provide you the answer it thinks you want. Some AI software will use your prompts to provide an answer that it thinks you are looking for, rather than the correct answer. These false answers will always be structured that make it seem correct and plausible, so unless you are well versed in tax you won’t be able to tell if you are being given bad advice or not.
While AI can be a great tool to get started, or even start conversations with your tax adviser, it is a long way off replacing a tax professional. Having that human touch, someone who can give personal advice and who may have known you for many years will always be much better than the generic advice AI can give.
The tax rules may be non-negotiable, but good tax advice can help you work with the rules and plan out the most efficient way to manage your taxes. Something that the generic AI systems will not give you.
