HM Revenue and Customs (HMRC) could seek access to AI chatbot conversations and digital records used to prepare tax calculations under proposed changes to its information-gathering powers.
The proposals would allow the tax authority to examine a wider range of information held by taxpayers, businesses and third-party providers, including software companies and platforms managing digital records.
The changes are part of the Finance Bill 2026-27 and are intended to update existing legislation to reflect how financial information is created, stored and processed through automated systems and cloud-based services. They have not yet become law and are expected to take effect following Royal Assent.
The possibility that conversations with tools such as ChatGPT, Microsoft Copilot and Claude could fall within the expanded scope has raised concerns among tax advisers and privacy campaigners.
Nimesh Shah of accountancy firm Blick Rothenberg said the most significant issue was HMRC's intention to obtain information about how tax figures had been produced using software or automated processes.
He said this raised questions about whether prompt histories, AI-generated working papers, chatbot conversations used to prepare tax calculations and audit trails within AI agents could become disclosable.
HMRC already has powers under Schedule 36 of the Finance Act 2008 to issue information notices requiring taxpayers and certain third parties to provide documents or information needed to check a person's tax position.
The proposed changes would update Section 114 of the same legislation, which deals with computer records. The definition would be broadened to cover information held in modern digital systems rather than being limited to traditional computer records.
Importantly, Section 114 does not create a separate power allowing HMRC to access any digital information it chooses. It supports existing information-gathering powers under Schedule 36, which still require a lawful basis for requesting material.
This could become relevant when taxpayers use AI tools to prepare tax calculations, assess deductible expenses or organise business accounts. If HMRC investigates the figures submitted, it may seek information explaining how those calculations were produced.
Seb Maley, chief executive of tax insurance provider Qdos, in a news report quoted as saying, "As more taxpayers and businesses put their trust in AI to help manage their tax affairs, HMRC is making sure it isn't left behind. It wants to know not just what tax figure a system produces, but how it arrived at that number."
The proposed changes could also affect third-party providers holding relevant information on behalf of taxpayers. This means the issue is not limited to individuals being asked to supply their own records. Software and cloud-service providers could also face requests where the information falls within HMRC's existing legal powers.
However, the proposals do not mean that every conversation with an AI chatbot will automatically become available to the tax authority.
An HMRC spokesman said: "This is about updating our existing information powers to reflect how tax information is now stored and processed digitally.
"It is not about going through everyone's use of large language models. We can only request information where we already have a lawful basis to do so."
HMRC uses Schedule 36 notices to obtain information from individuals, businesses and third parties during tax…
