UK: Can HMRC Demand Your ChatGPT Tax Conversations?

Last updated: November 2026 · Regulatory Status: Proposed (Finance Bill 2026-27, before Parliament)

If you asked ChatGPT, Claude or Copilot to help work out your expenses, capital gains or a tax computation, could HMRC ask to see that conversation? The UK government is rewriting the rules on what HMRC can demand in a tax check, and the new wording is broad enough that advisers are now asking exactly that question.

The short answer: the draft legislation does not mention AI, and it does not give HMRC a general right to read private chatbot histories. But where HMRC already has a lawful basis to request information, the reforms make clear that this can include digital records showing how a tax figure was produced. If an AI conversation is part of that trail, it may fall within scope.

At a glance: HMRC information powers reform

Attribute	Detail
Status	Proposed; included in Finance Bill 2026-27, introduced to the House of Commons in November 2026
Legislation amended	Schedule 36 Finance Act 2008 (information and inspection powers) and section 114 Finance Act 2008 (computer records)
Draft published	13 July 2026 (L-Day); technical consultation closed 7 September 2026
Effective date	On and after Royal Assent to Finance Bill 2026-27
Key change	Section 114 renamed "Digital information" and extended from computers to "anything" holding relevant information
Who is affected	Taxpayers, third parties and intermediaries (including software providers), banks and cryptoasset platforms
Mentions AI?	No
Official source	GOV.UK – Reforming information powers and modernising computer records law

What is actually proposed?

The reform updates two pillars of HMRC's investigation toolkit. Schedule 36 lets HMRC issue notices requiring taxpayers and third parties to provide information and documents reasonably required to check a tax position. Section 114 deals with computer records and was written for a world of desktop machines and accounting packages.

The draft legislation makes four main changes:

• Section 114 becomes "Digital information". References to "any computer and any associated apparatus or material" are replaced with "anything", and a new definition of "relevant information" covers any information found in a relevant document or relevant thing.
• How figures were produced. According to the government's policy paper, where HMRC already has the right to request information, it can obtain and understand relevant information held in digital systems, including how tax figures were produced where software or automated processes generated them.
• Third parties and intermediaries. Where a Schedule 36 notice goes to a third party, the requirement may extend to relevant information that party holds or manages digitally. Software providers are named among those affected.
• Cryptoasset service providers. Financial Institution Notices, which HMRC can issue without tribunal approval, are extended to cryptoasset service providers. This fits HMRC's wider push on crypto data under the CARF reporting framework.

The measure was first announced at HMRC's Tax Update 2026 and follows a 2023 call for evidence with software providers and industry bodies.

Does the draft law mention ChatGPT or AI?

No. Neither the draft clauses nor the policy paper refer to artificial intelligence, large language models or chatbots. The AI angle comes from how tax advisers and the press have read the broader "digital information" wording.

The Independent reported on November 2026 that HMRC could ask software providers and AI platforms for information showing how taxpayers arrived at their figures. An HMRC spokesperson responded that the change reflects how tax information is now stored and processed digitally, is not about trawling through people's use of AI tools, and that HMRC can only request information where it already has a lawful basis to do so.

Could HMRC request your AI tax conversations?

Potentially, but only in limited circumstances. Under the proposed rules, an AI conversation is most likely to be relevant where it was used to produce a figure on a return, such as classifying expenses, calculating a gain or allocating costs, and HMRC is already checking that return.

In practice, three conditions would usually need to line up:

1. A live check. HMRC must be checking a tax position and have a lawful basis to issue an information notice.
2. Relevance. The information must be reasonably required to check that position. A chat about holiday plans is not; a chat that produced your rental expense schedule might be.
3. Possession or power. The person receiving the notice must hold the information or be able to obtain it.

It is also worth noting that Schedule 36 already covers documents in a taxpayer's possession. A saved chat log used to prepare a return is arguably a document today. The reform mainly removes doubt about digital and automated records rather than creating an entirely new category of evidence.

What safeguards apply?

The existing Schedule 36 safeguards continue to apply. Key protections include:

• "Reasonably required" test. HMRC can only ask for information reasonably required to check a tax position. Notices can be challenged where they go beyond that.
• Third-party notices need approval. A notice to a third party generally needs either the taxpayer's agreement or approval from the First-tier Tribunal.
• Taxpayer first. The government says HMRC would normally approach the taxpayer first, turning to third parties only where that does not produce the information needed.
• Appeal rights. Taxpayers can generally appeal against a taxpayer notice, except for statutory records.
• Privilege. Legal professional privilege is protected. A conversation with an AI tool, however, is unlikely to attract privilege, because it is not advice from a lawyer.

There is no general exclusion for personal or confidential information under Schedule 36, so careful scoping of any notice remains important.

What about AI providers based outside the UK?

This is one of the open questions. Most major AI providers are headquartered outside the UK, and how a Schedule 36 notice would operate against them in practice is untested. For now, the more realistic route is a request to the taxpayer or their adviser, who may hold the conversation in their own account or files.

What are the penalties for not complying?

Failing to comply with a Schedule 36 notice can lead to an initial penalty of £300, followed by daily penalties of up to £60. Providing inaccurate information or documents in response to a notice can lead to a penalty of up to £3,000 per inaccuracy.

Why the reform matters

Tax figures are increasingly produced by software, cloud platforms and AI assistants rather than by hand. HMRC's view is that its powers must keep pace so that enquiries can follow the calculation, not just the final number. HMRC is already a heavy user of these powers: it issued over 1,000 Financial Institution Notices in the 12 months to March 2025.

Critics see a privacy risk. The Taxpayers' Alliance described the prospect of HMRC requesting AI conversations as deeply intrusive. Professional bodies, including ICAEW, have welcomed modernisation but asked for key terms and the scope of the powers to be made clearer.

The bigger shift is cultural. As AI becomes embedded in tax compliance, prompts, outputs and automated workings start to look like part of the audit trail, in the same way spreadsheets and accounting ledgers do today.

6 practical steps for taxpayers and advisers

1. Keep proper workings. Save the final calculation and its basis in your records. Don't rely on a chat history as your only evidence.
2. Separate tax work from personal chats. Use a dedicated project, workspace or account for tax tasks so relevant material is easy to identify and irrelevant material is easy to exclude.
3. Check retention settings. Understand how long your AI provider stores conversations and whether you can export them if asked.
4. Minimise personal data. Avoid pasting full bank statements, UTRs or client identifiers into consumer AI tools unless your data policy allows it.
5. Verify AI outputs. You remain responsible for the accuracy of your return, whatever tool you used. HMRC will not accept that a chatbot gave the wrong answer as a defence.
6. Set a firm-wide AI policy. Advisers and in-house tax teams should document how AI is used in preparing figures, how outputs are reviewed, and where records are kept.

Frequently asked questions

Can HMRC read my ChatGPT history?

Not as a general right. The proposed reforms do not give HMRC open access to private AI conversations. HMRC would need a lawful basis, such as a live enquiry, and the information would need to be reasonably required to check your tax position.

Does Finance Bill 2026-27 mention artificial intelligence?

No. The draft legislation refers to "digital information" and "anything" holding relevant information. The link to AI comes from commentators applying that wording to chatbot records used to prepare tax figures.

When will the new HMRC information powers apply?

The measure takes effect on and after Royal Assent to Finance Bill 2026-27. Finance Bills usually receive Royal Assent in the spring, and press reports have suggested May 2027. The wording could still change during the bill's passage through Parliament.

Can HMRC ask an AI company directly for my data?

The reforms clarify that Schedule 36 third-party notices can cover digital information held by third parties, including software providers. Third-party notices generally need the taxpayer's agreement or tribunal approval, and HMRC says it would normally ask the taxpayer first. How this would work against AI providers based abroad is untested.

Is it safe to use AI to prepare my tax return?

The legislation does not restrict using AI for tax purposes. You remain responsible for the accuracy of what you file, so check AI outputs against official guidance and keep clear records of how each figure was calculated.

Are conversations with AI tools protected by privilege?

Unlikely. Legal professional privilege protects communications with lawyers for the purpose of legal advice. A conversation with a general AI assistant would not normally qualify.

Conclusion

HMRC is not gaining a right to read everyone's chatbot history. But the Finance Bill 2026-27 reforms make it clear that the digital trail behind a tax figure can be requested in an enquiry, and that trail increasingly runs through AI tools. The bigger question for taxpayers and tax teams is whether their AI-assisted workings would stand up if HMRC asked to see them.

Official sources: GOV.UK – Reforming information powers and modernising computer records law (policy paper) · GOV.UK – Draft legislation · UK Parliament – Finance Bill 2026-27 · Schedule 36 Finance Act 2008 · Section 114 Finance Act 2008

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