The sudden rise of artificial intelligence has left many concerned that it will make their jobs redundant. What does this mean for tax professionals services in the United Kingdom?
How will your services be more automated?
Artificial intelligence is already transforming tax compliance and reporting by automating routine tasks that were previously labour-intensive for tax professionals. For example, global firm PwC has introduced a new AI tool for its workers that reduces the burden of repetitive tasks, allowing them time to focus on more complex tasks.
AI’s ability to process vast amounts of data quickly allows for faster and more accurate procedures such as tax returns. According to Thomson Reuters, AI can apply relevant tax rules to transaction-level data in real time, making the process far more efficient than when done manually. This proves particularly useful for large corporations which handle thousands of transactions regularly, where even small errors can result in significant financial consequences.
Improving tax compliance and reducing mistakes
Since launching its ‘AI Lab’ in 2016, a team of experts at HMRC have been developing new AI-based tools to assist the authority with collecting taxes. By identifying patterns in financial data, the AI can detect any suggestions of fraud or non-compliance. Using AI-based tools will reduce the chance of human error that could lead to penalties. As it becomes more familiar with tax regulations and laws, using AI rather than humans should therefore reduce the likelihood of costly mistakes in the future.
AI can also help businesses maintain compliance by providing real-time updates on ever-changing tax laws and ensuring that they are followed. This reduces the likelihood of mistakes or penalties due to outdated or incorrect tax filings.
Personalized tax advisory services
AI is also set to transform the advisory aspect of tax work. It can sift through complex tax codes and large amounts of historical tax data to provide personalised advice tailored to individual or corporate taxpayers. This can result in more accurate tax planning strategies and optimized tax positions, according to KPMG.
Generative AI tools such as ChatGPT, which are capable of understanding and generating human-like text, can assist tax professionals by summarising complicated regulations and generating reports that are as accurate as those produced by junior staff members (ICAEW.com).
Challenges and ethical considerations
While AI promises to make the tax profession in the UK and the rest of the world more efficient, it raises significant challenges. One major concern is data security. As AI systems rely heavily on large amounts of sensitive data, ensuring this data remains secure is crucial. Any data breach could expose both firms and taxpayers to significant risks (BDO) not fully understood, making it potentially untrustworthy.
Another challenge is the risk of over-reliance on AI. Despite its power, AI is not infallible. Generative AI systems are known to make mistakes, sometimes producing inaccurate or irrelevant outputs. In a field as precise as tax, even small mistakes can have significant consequences. Therefore, human input will continue to play a crucial part in ensuring that AI-generated results are accurate and compliant with the law.
Upskilling and the future workforce
As AI takes over many routine tasks, the role of tax professionals will evolve. They will need to develop new skills, particularly in overseeing AI systems and interpreting AI-generated insights. This shift will likely lead to an increased focus on strategic advisory work rather than repetitive tasks. Many firms are already investing in training programs to help their staff adapt to the changing landscape (ICAEW.com).
In the long term, AI is expected to enhance, rather than replace, the role of tax professionals. Just as calculators didn’t replace accountants, AI will work alongside tax practitioners, enabling them to deliver more value to clients and organizations.
