Can HMRC Demand My AI Chatbot History in a Tax Check?

HMRC cannot demand your ChatGPT history just because it exists. Under Schedule 36 to the Finance Act 2008, it can require information or documents only if they are reasonably required to check your tax position. Changes HMRC drafted for the Finance Bill 2026-27 would widen the digital material that HMRC’s powers reach, and tax advisers have asked whether that could include AI prompts and chatbot workings used to prepare a tax figure.

The draft wording would let HMRC’s digital information power reach any “relevant thing”, and would allow HMRC to require assistance from whoever created, developed or produced it. That is why AI platforms and software providers have entered the discussion. HMRC describes the aim of the reform as helping it access and process information in a digital economy, supporting tax compliance checks and meeting international information exchange standards. Our guide to Schedule 36 notices explains how these requests work.

What HMRC Can Demand Today

Under paragraph 1 of Schedule 36, an officer can give you a taxpayer notice requiring information or a document “if the information or document is reasonably required by the officer for the purpose of checking the taxpayer’s tax position”. Section 114 of the Finance Act 2008 treats a document as anything in which information is recorded. It also lets an authorised officer inspect a computer, and associated apparatus or material, used in connection with a relevant document, and require reasonable assistance from the person who uses it and anyone concerned with operating it. Our guide to how much you must disclose to HMRC covers the practical side.

The schedule also sets limits. A notice can require a document only if it is in your possession or power (paragraph 18). It cannot require a document that originated entirely more than six years before the notice, unless an authorised officer gives or agrees to the notice (paragraph 20). Once you have filed a return, a taxpayer notice cannot be used to check your income tax, capital gains tax or corporation tax position for that period, unless one of four conditions applies (paragraph 21). One condition is an open enquiry into the return. Another is that an officer has reason to suspect tax was under-assessed. Privileged information is excluded (paragraph 23). The July 2026 draft legislation does not amend any of these paragraphs. Our page on HMRC tax investigations explains how enquiries are opened.

What Is Changing

HMRC published the draft legislation for technical consultation on 13 July 2026, for inclusion in the Finance Bill 2026-27. The consultation closed on 7 September 2026. The Finance Bill 2026-27 was published on 4 November 2026. The reforms are to take effect on and after Royal Assent to the Finance Bill 2026-27. Data-led contact from HMRC is already familiar from HMRC nudge letters.

The July draft renames section 114 “Digital information”. It replaces the reference to “any computer and any associated apparatus or material” with “anything”, and brings in the terms “relevant information” and “relevant thing”. It also adds a new category of person from whom HMRC can require assistance: any person who created, developed or produced that thing. Our article on HMRC powers to gather information from third parties covers earlier changes of this kind.

The same draft extends financial institution notices under paragraph 4A of Schedule 36 to cryptoasset service providers. If you hold crypto, our guide to HMRC crypto tax assessments explains where that leads.

Would an AI Chat History Be Caught?

The July draft does not mention artificial intelligence, chatbots or large language models. The connection comes from the wider wording and from HMRC’s stated aim of obtaining information held in digital systems, including how tax figures were produced. Tax advisers have asked whether prompt histories, AI-generated working papers and chatbot conversations used to prepare a tax calculation could become disclosable if they formed part of that calculation. No court has yet considered the new wording, because it is not yet law. The question is the kind that comes up in a compliance check.

Whatever the final wording, a taxpayer notice would still have to meet the paragraph 1 test, and paragraph 18 would still limit it to material in your possession or power. Whether a particular chat meets that test depends on what it contains and why HMRC wants it. Our guide to challenging a Schedule 36 penalty shows how these disputes arise.

Privilege: Why a Chatbot Is Not Your Solicitor

Under paragraph 23, an information notice does not require privileged information or privileged parts of documents. Privilege here means information or documents for which a claim to legal professional privilege could be maintained in legal proceedings. In R (Prudential plc) v Special Commissioner of Income Tax [2013] UKSC 1, the Supreme Court held that legal advice privilege does not extend to tax advice given by accountants. Our article on accountants’ reports and privilege and our note on an accountant’s report disclosed in litigation explain the consequences.

Paragraph 25 separately protects “relevant communications” between a tax adviser and their client for giving or obtaining tax advice, subject to the exceptions in paragraph 26. A tax adviser is defined as “a person appointed to give advice about the tax affairs of another person”. No English court has yet decided a contested privilege dispute about the use of AI. Legal advice privilege depends on the involvement of a lawyer, as Prudential shows, and an AI tool is not a lawyer or a person appointed to give tax advice. Our article on tax advisers and legal professional privilege covers the wider position.

Do Not Delete Anything

If you used an AI tool to prepare your tax figures, do not clear the history in response to the proposed changes. If a notice requires a document and you do not produce it, you have failed to comply with the notice. That carries a £300 penalty under paragraph 39, then daily penalties of up to £60 under paragraph 40. Providing inaccurate information in complying with a notice can lead to a penalty of up to £3,000 under paragraph 40A. Concealing, destroying or disposing of a document is a criminal offence in two cases: where the document is required by a notice the tribunal has approved (paragraph 53), or after an officer has told you in writing that the document is likely to be the subject of a notice the officer intends to seek approval for (paragraph 54). The maximum sentence on indictment is two years’ imprisonment, a fine, or both (paragraph 55).

Keep what you have, and check whether your tool deletes history automatically. If HMRC has already written to you, our page on understanding HMRC letters will help you work out which process you are in.

Relying on AI for Your Tax Figures

Under paragraph 3 of Schedule 24 to the Finance Act 2007, an inaccuracy is careless if it is due to a failure to take reasonable care. HMRC’s factsheet CC/FS7a says no penalty is charged where you took reasonable care, and that what counts as reasonable care depends on your abilities and circumstances. If an AI-produced figure turns out to be wrong, the question for penalty purposes is whether you took reasonable care. Our guide to careless, deliberate and concealed behaviour explains how HMRC classifies errors.

Timing matters too. According to CC/FS7a, the penalty range for a careless error is 0% to 30% of the potential lost revenue where you tell HMRC before you have reason to think it has found the error, and 15% to 30% where the disclosure is prompted. Once a check has started, a disclosure can only be unprompted in exceptional cases. Our voluntary disclosure guide and our page on HMRC penalties set out the options.

If You Receive a Notice Asking for Digital Records

Check that each requirement is reasonably required, that you hold the material and that the limits above have been respected. You can appeal against a taxpayer notice or any requirement in it, except one relating to your statutory records or a notice the tribunal has approved (paragraph 29). Notice of appeal must be in writing, state your grounds and be given within 30 days beginning with the date the notice was given (paragraph 32). The tribunal can confirm, vary or set aside the notice, and its decision is final. If you need to argue the point, see our page on the First-tier Tax Tribunal.

If the 30 days have passed, our guide on late appeals explains the position. If HMRC asks to interview you about your answers, read our page on HMRC interviews first.

If Your Accountant Used AI and Got It Wrong

In the Administrative Burdens Advisory Board’s 2026 survey, 32.4% of respondents said they had used a generative AI system such as ChatGPT or Copilot to answer a tax query, and 7.2% of those users later found the answer was not reliable. If your adviser relied on AI and the figures were wrong, you may have a claim for the penalties and interest you were charged as a result. Our guide to claims for negligent tax advice explains how such a claim works and why limitation periods matter.

How We Can Help

We act for taxpayers who receive Schedule 36 notices or whose returns are under HMRC compliance checks. We review the notice, test each requirement against HMRC’s powers, advise on privilege, prepare the response and appeal to the tribunal where a notice goes too far. We deal with HMRC directly so the correspondence comes to us. We do not offer free legal advice or legal aid, and we generally take on substantial matters. More on our tax work is on our taxation solicitors page.