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Tax professionals embrace AI's potential while navigating risks

Tax Technology & AI
01 July 2024

The tax profession is rapidly adopting generative AI to increase efficiency and unlock new insights. A recent Tolley survey found 9% of UK tax practitioners use AI daily, while over a third use it at least monthly. However, enthusiasm is tempered by concerns around reliability, security, and ethical implications when using public AI tools not grounded in authoritative tax data. This blog explores the key priorities and risks tax professionals face with AI adoption and how trustworthy, citable AI tools can help.

Unlocking AI's potential in tax

Research and drafting top priorities

Tax professionals' top priorities for using AI are researching tax matters (91%) and drafting documents (87%). Generative AI excels at quickly analysing complex information, spotting patterns, and generating human-like outputs – invaluable for tax research, reporting, and client communications.

“Generative AI can help tax professionals understand, break down and evaluate analysis so they better address client circumstances,” says Becky Shields, Partner and Head of Transformation at Moore Kingston Smith.

Driving productivity and insights

Smaller firms like Larkstoke Advisors see AI's potential to “drive productivity by enabling tax professionals to focus on the technical and value-adding aspects of their roles,” says Founding Partner Michael Beart.

Larger firms such as Evelyn Partners are using AI for mapping trial balances, creating claim narratives from transcripts, and interpreting foreign documents.

Learn more about Tolley's AI solutions for tax

Navigating AI's risks

Reliability and security concerns

While eager to adopt AI, 77% of tax practitioners voice concerns over the reliability and security of publicly accessible generative AI tools. Lack of transparency around training data and potential for inaccurate or biased outputs are key worries.

“The big risk is the professional services market diverges from the knowledge and abilities practitioners can offer,” says Helen Whiteman, CEO of the Chartered Institute of Taxation.

Overreliance without human review also risks providing incorrect advice leading to potential liability.

The need for trustworthy, citable AI

To confidently adopt AI, tax professionals need tools grounded in authoritative tax data with transparent reasoning and human oversight.

71% would be more confident using generative AI linked to verifiable tax sources. Four-fifths of in-house teams expect to be informed if external advisors use AI.

“Training advisers to ask the right questions and ensuring review procedures are critical for omitting hallucinations from generative AI,” advises Shields.

Tolley is developing responsible, explainable AI solutions built on established RELX principles, proactively preventing bias and championing privacy.

Sign up for the Tolley+ AI™ Insider Programme for early access

Conclusion:

As generative AI's capabilities rapidly evolve, the tax profession stands to benefit immensely through increased productivity, better client service, and valuable new insights. However, adopting AI built on public data alone raises significant risks around accuracy, bias, and liability. By prioritising trustworthy AI tools grounded in authoritative tax data and transparent reasoning, tax professionals can confidently navigate the future of AI-augmented tax services.