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Aipedia: Tax advisers
PI usually covers a negligence claim caused by an AI error in the same way as any other mistake, because CIOT/ATT minimum terms require cover for all civil liability. Fines, sanctions and poor disclosure are where problems arise.
Part of: AI in Tax advisers
In short
CIOT and ATT members in practice must ensure their firm holds PI of at least £1m for each and every claim, or less for smaller firms, covering all civil liability from tax services. That wording does not depend on how an error was made, so an AI-caused mistake is usually treated like any other negligence claim, subject to the policy. HMRC registration, mandatory since 2026, does not require PI, and in 2021 the government decided not to make PI compulsory. Fines and disciplinary sanctions are a separate matter. Neither CIOT, ATT nor HMRC has published anything on AI and PI, so disclosure to insurers matters.
The CIOT/ATT Professional Indemnity Insurance Regulations, effective from 1 January 2023, set out the requirements:
| Regulation | Requirement |
|---|---|
| 2.1 and 4.1 | Members in practice must ensure their firm holds PII |
| 4.1(b) | Cover all civil liability arising from tax services |
| 4.1(d) | Not avoidable for misrepresentation or non-disclosure, except for sole practitioners |
| 5.1 | Minimum £1m for each and every claim |
| 5.2 | Gross fees under £400,000: the greater of 2.5 times fee income or £100,000 |
| 5.3 | Maximum excess £30,000 per principal |
| 7.1 | Cover for at least six years after ceasing practice |
Exemptions in 3.1 to 3.5 cover pro bono work, some subcontractors, employees, retired members and some overseas firms. Accountants doing tax work follow their own body's PII rules. See CIOT/ATT tax specialist PII.
Civil liability wording responds to the adviser's legal liability, not to the method used. If a fake case, wrong VAT classification or unchecked return causes loss and the adviser was negligent, the claim is usually within cover, subject to the terms, the excess and any exclusions. The PCRT AI guidance does not mention PI, but its statement that members "remain ultimately accountable for any work produced" (para 3.5) matches how a court would approach the question. Some policies may include AI-specific clauses; check whether yours does. See AI exclusions and clauses and does PI cover AI mistakes.
Since 2026 anyone paid to interact with HMRC on another person's tax affairs must register with HMRC. The conditions cover AML supervision, tax compliance, no HMRC refusal decision or anti-avoidance sanction or stop notice, no relevant unspent convictions, not being insolvent and not being banned. PI is not a condition. On 30 November 2021 the government decided "not to introduce a mandatory requirement for tax advisers to hold PII at this time". Unqualified advisers may therefore register without PI, while CIOT and ATT members in practice remain bound by their own rules. See HMRC registration and PI.
PI is designed to pay compensation to clients and others for civil liability. It is commonly not designed to pay:
Some policies include limited cover for defence costs in disciplinary proceedings. A tribunal costs order, such as wasted costs after Elden-type criticism, may or may not fall within cover depending on the wording. Penalties charged to a client and then claimed from the adviser as damages are a different matter, and may form part of a civil claim. See the fines and penalties exclusion.
Under the Insurance Act 2015, firms must make a fair presentation of the risk. Although 4.1(d) prevents insurers avoiding cover for non-disclosure (except for sole practitioners), poor disclosure can still affect terms and lead to disputes. Tell insurers or your broker:
See the fair presentation duty and what to document about AI use.
Related: AI-drafted tribunal submissions, client data in AI tools and the AI in tax advice hub.
Apex arranges PI for tax advisers and checks policies against the CIOT/ATT minimum terms. A broker can review how your wording treats AI-assisted work and help you describe your AI use to insurers.
Usually not. CIOT/ATT minimum terms require cover for all civil liability from tax services, which does not depend on the tool used. Check for any exclusions or clauses that do mention AI or technology, as wordings vary.
No. GOV.UK lists the registration conditions as AML supervision, tax compliance, no relevant sanctions or unspent convictions, not being insolvent and not being banned. PI is not one of them. CIOT and ATT members in practice still need PI under their own rules.
Commonly not. PI is designed for compensation claims. Fines and sanctions imposed on the firm are usually excluded, although some policies include limited cover for defence costs in disciplinary proceedings. Check your wording.
Under the CIOT/ATT regulations, firms with gross fees under £400,000 need the greater of 2.5 times fee income or £100,000 per claim (5.2). Otherwise the minimum is £1m for each and every claim (5.1). Many firms choose more.
Tell us about your firm and the work you do. A broker will review how your current PI treats AI-assisted work, or arrange new cover. No fee for a quote. Or call 0117 325 0027.
Start a PI quote Request a callbackApex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information about how AI is used in the profession and how insurance may respond. It is not legal, regulatory or insurance advice on your circumstances, and it does not guarantee that cover will be available or on what terms.
