HMRC gives guidance to software developers on the use of AI

HMRC has set out its expectations for the use of generative AI in commercial software products used to submit information to HMRC. This is important for tax software developers, and for anyone who uses tax software products.

HMRC’s 2025 Transformation Roadmap set out ambitious targets for customer services. By 2030, HMRC aims to be a ‘digital first’ organisation, with at least 90% of customer interactions happening online. HMRC's use of AI  was an important feature of the roadmap. 

HMRC has now turned its attention to the commercial software products, which many taxpayers and advisers use to submit returns and other information to HMRC. It recognises the opportunities that generative AI offers to software developers. However, it also wants them to understand its expectations for ‘good use’ of AI.

HMRC’s guidance for software developers

The guidance states that HMRC expects that software products that use generative AI:

• Are transparent.
• Consider HMRC guidance and only use reliable source data (which should be in line with the relevant legislation).
• Are designed with human oversight and control.
• Include strong data-security and privacy measures.
• Are ethical.

All developers are also reminded that HMRC doesn’t endorse or approve any software developer or product. Developers mustn’t suggest that they are acting on behalf of HMRC.

Using generative AI with transparency

HMRC expects developers to be transparent about how generative AI is used within their software and to explain its capabilities and limitations.

Users should be able to:

• Identify the source data used.
• Understand how the source data is processed.
• Understand the limitations of the model and raise issues identified with its results.
• Be aware of the possibilities of bias and inaccuracies (including ‘hallucinations’, where the generative AI system produces information that appears to make sense but is factually incorrect or made up).

Using reliable source data

HMRC expects any software enhanced by generative AI to:

• Support the production of tax returns and related information.
• Produce results that comply with tax legislation and case law to support users to submit an accurate return.

It’s important that the data sources used by generative AI models are high quality and reliable. HMRC expects these data sources to come from materials, such as:

• Official HMRC publications
• Legislation
• Established case law

Developers will also need to monitor the data sources and update their software in a timely way to reflect changes in tax legislation, case law and HMRC guidance as they happen.

Designing with human oversight and control

HMRC wants generative AI-enhanced tax software to be designed with strong human oversight and control built in at appropriate stages. AI should support, not replace, human judgement. Where necessary, the software should prompt users to check the results themselves and allow them to correct any errors, or raise any issues with the software. 

If the software identifies areas involving nuanced tax rules, complex scenarios or specific guidance, HMRC states that it should flag these to the user. It should also identify the need to investigate further or recommend seeking advice from a qualified tax professional.

Users should also be reminded that it’s their responsibility to make sure their tax returns are accurate.

Including strong data-security and privacy measures

HMRC states that generative AI-enhanced tax software should incorporate Secure Software Development Lifecycle (SSDLC) best practices by:

• Complying with UK General Data Protection Regulations (GDPR)
• Embedding privacy by design
• Building in strong security measures

HMRC notes that this is important because some of these tools handle highly sensitive personal, commercial and financial data. Users should be able to see how their information is processed.

Using generative AI ethically

HMRC expects developers who are building generative AI-enhanced software to operate in a way that:

• Makes sure all software outputs fully comply with legal requirements.
• Uses diverse and representative training data — and where personal data is involved, makes sure its use is fully compliant with UK GDPR.
• Implements continuous auditing to prevent the development of harmful, biased, or discriminatory models.
• Makes sure the AI system is fair and trustworthy, fully accountable, and demonstrably serving the public good.

Guidance for tax advisers on the use of AI for tax work 

HMRC is not alone in considering the use of AI for tax purposes. 

In January 2026, the Professional Conduct in Relation to Taxation (PCRT) group of professional bodies published topical guidance covering the application of PCRT to the ethical use of AI tools. This guidance highlights important areas of risk arising from the use of AI tools in tax work and outlines possible safeguards to deal with those risks.

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