Aipedia: Tax advisers

AI in tax advice: rules, risks and PI insurance

Aipedia, by the Apex broking team · Last reviewed 2026-10-27

UK tax advisers can use AI, but the PCRT bodies say members remain accountable for every piece of work it touches. Tribunals have already criticised AI-generated case citations, so errors are visible and attributable.

Part of: AI in Tax advisers

In short

Tax advice is not a regulated activity, but CIOT and ATT members, and accountants doing tax work, follow the joint PCRT code. In January 2026 the seven PCRT bodies published topical guidance on AI: be transparent with clients, check output as if a junior wrote it, confirm that cited cases exist, and keep client data out of public tools without consent. The tribunals have dealt with fake or misdescribed authorities in Harber, Zzaman, Gunnarsson and Elden. CIOT and ATT members in practice must hold PI of at least £1m for each and every claim, while HMRC registration does not require PI.

How tax advisers are using AI

Generative AI chatbots and AI features inside tax and bookkeeping software can now touch many stages of tax work. Common uses include:

researching legislation, HMRC manuals and case law;
extracting figures from bank statements, invoices and documents for returns;
drafting advice reports, client emails and replies to HMRC enquiries;
preparing narratives for R&D claims and tribunal skeleton arguments;
transcribing and summarising client meetings;
running bookkeeping and quarterly digital updates with limited human input.

Each use saves time. Each also creates a new way for an error to reach a client, HMRC or a tribunal with the adviser's name on it.

The rules that apply

Tax advice is not regulated by statute in the UK. Professional standards come from the bodies. The main code is Professional Conduct in Relation to Taxation (PCRT), shared by AAT, ACCA, ATT, CIOT, ICAEW, ICAS and STEP. An updated PCRT applies to tax work from 1 January 2026, aligned with the IESBA tax planning standard. It adds disclosure of relationships with third-party tax planning providers, applies PCRT to second opinions, and deals with credible-basis disagreements. The Taxation Disciplinary Board applies the version in force when the incident happened.

On 19 January 2026 the seven bodies published topical guidance on the ethical use of AI. It is guidance that supplements PCRT, not a separate standard. Its key points, by paragraph of the AAT copy:

Integrity (1.1 to 1.6): be transparent about AI use, consider an engagement letter statement (1.3), and supervise staff (1.6).
Objectivity (2.1 to 2.4): guard against automation bias.
Competence (3.1 to 3.7): treat output as if prepared by a less experienced junior colleague and confirm that case law and legislation exist (3.4); members remain ultimately accountable (3.5).
Confidentiality (4.1 to 4.6): client data in public AI tools is likely to breach confidentiality without consent (4.2).
Professional behaviour (5.1 to 5.7): avoid negligent work and contrived planning, and keep HMRC correspondence professional.

Accountants who are members of CCAB bodies also face the ICAEW Code technology revisions and the draft CCAB statement on ethical AI; see AI in accountancy.

What the tribunals have said

Four decisions show how tribunals treat AI errors in tax litigation.

Case	What happened	Key point
Harber [2023] UKFTT 1007 (TC)	An unrepresented taxpayer cited nine FTT decisions that did not exist.	Fake cases waste resources and "promote cynicism" (para 24). Cited in the PCRT guidance.
Zzaman [2025] UKFTT 539 (TC)	An AI-prepared statement of case cited authorities that did not support it.	"The dangers of reliance on AI tools without human checks" (para 29).
Gunnarsson [2025] UKUT 247 (TCC)	A skeleton cited three FTT decisions that appear not to exist.	Representatives are responsible for what they put forward; costs and strike-out are available.
Elden [2026] UKFTT 41 (TC)	An ICAEW-regulated firm's AI-assisted skeleton misdescribed three authorities.	"Professional incompetence" (para 139); statements of truth required (para 158); possible referral to professional bodies (para 159).

No Taxation Disciplinary Board decision involving AI has been found so far.

HMRC registration and AI

Since 2026 anyone paid to interact with HMRC on another person's tax affairs must register with HMRC, even with a single client. HMRC's registration conditions cover AML supervision, tax compliance, sanctions, convictions and insolvency. They do not mention AI and do not require PI. See HMRC tax adviser registration and PI.

The main risks for tax advisers

Wrong law: invented or misdescribed cases, repealed reliefs and out-of-date rates.
Unchecked automation: returns and quarterly updates filed with figures nobody reviewed.
Overconfident advice: polished reports that hide gaps in the analysis.
Confidentiality: client data pasted into public tools or captured by notetakers.
Litigation conduct: tribunal criticism, statements of truth and referrals after Elden.
Record gaps: no audit trail of what the tool produced and who checked it.

Where PI insurance fits

The CIOT/ATT PII Regulations require members in practice to ensure their firm holds PI (2.1 and 4.1). Cover must be at least £1m for each and every claim (5.1), or for firms with gross fees under £400,000 the greater of 2.5 times fees or £100,000 (5.2). It must cover all civil liability from tax services (4.1(b)), the excess is capped at £30,000 per principal (5.3), and cover must run for at least six years after ceasing practice (7.1).

Because the wording must cover civil liability, a negligence claim caused by an AI error should usually fall within cover in the same way as any other mistake, subject to the policy terms. Fines, tribunal sanctions and disciplinary costs are a different matter. Neither the PCRT guidance nor CIOT, ATT or HMRC has published anything on AI and PI. See the tax advisers PI guide and the CIOT/ATT PII explainer.

Practical controls

Write an AI policy naming approved tools and banned uses.
Add an AI statement to engagement letters, as PCRT AI para 1.3 recommends.
Check every case, section and rate against a primary source.
Keep an audit trail: tools used, prompts, screenshots and the reviewer.
Keep client data out of public tools unless the client has consented.
Tell your broker how you use AI at renewal.

Aipedia guides for tax advisers

PCRT AI guidance explained: the January 2026 guidance section by section.
AI tax research and fake case law: checking authorities after Harber and Zzaman.
AI-drafted tribunal submissions: what Elden means for representatives.
AI in Self Assessment returns: data extraction and missed income.
AI-prepared R&D claims: generic narratives and enquiry risk.
AI tax planning ideas: contrived planning and the Standards for Tax Planning.
AI-drafted HMRC enquiry letters: accuracy and tone in compliance checks.
MTD quarterly updates and AI: automated bookkeeping and human review.
AI for CGT and property: computations and 60-day reporting.
AI in IHT and estate planning: out-of-date rules and long-tail claims.
AI for VAT liability: plausible but wrong classifications.
AI-drafted advice reports: overstating accuracy and third-party reliance.
AI meeting transcription: notetakers, consent and file records.
Client data in AI tools: PCRT para 4.2 and cyber overlap.
Does PI cover AI tax advice errors?: how compulsory PII responds.

How Apex helps

Apex arranges PI for tax advisers, from sole CTAs to mixed tax and accountancy practices. A broker checks your cover against the CIOT/ATT minimum terms and how your wording treats AI-assisted work.

Sources

Frequently asked

Is there a rule against tax advisers using AI?

No. The PCRT bodies accept that members will use AI. Their January 2026 topical guidance explains how the existing Fundamental Principles apply: be transparent, stay competent, check output, protect confidentiality and remain accountable for the final work.

Does HMRC have rules on AI for registered tax advisers?

Not at present. HMRC registration guidance and conditions, checked in October 2026, do not mention AI. The conditions cover AML supervision, tax compliance, sanctions, convictions and insolvency. Professional standards on AI come from PCRT and the professional bodies.

Will my PI cover a claim caused by an AI mistake?

Usually the question is whether there was negligence, not which tool was used. CIOT/ATT minimum terms require cover for all civil liability from tax services, so an AI-caused error is commonly treated like any other mistake, subject to the policy wording and fair disclosure.

Do I need to tell clients I use AI?

The PCRT AI guidance recommends transparency. Para 1.3 suggests an appropriate statement in the engagement letter and considering disclosure of actual AI use when work is delivered. Clients who ask that AI is not used should have that request respected or discussed.

Check your PI covers how you use AI

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.

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Apex 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.