Hire a lawyer, don’t ask AI: Taxpayers warned as HMRC set to snoop on chat logs

The Government has proposed widening HMRC’s powers to obtain digital records when investigating whether someone has paid the correct tax. Although the Finance Bill does not specifically mention AI chat histories, tax and legal experts say its broader definition of digital information could potentially bring relevant conversations with chatbots within scope.

The proposed rules would also require third parties, such as software providers, to supply tax information they hold. HMRC can already issue information requests under Schedule 36; failing to respond could bring an initial £300 fine, while not reporting inaccuracies could lead to a fine of up to £3,000. HMRC says requests will still need a lawful basis and insists the change is not about reviewing everyone’s use of AI; critics raise concerns about privacy and proportionality.