Can a chatbot give tax advice?by
The new ChatGPT chatbot has made headlines around the world, and accountants have been busy exploring how to use its full potential – including for tax advice. Paul Aplin gets to grips with the new AI tool and asks if there will still be a role for human tax advisers.
At the end of my last piece for AccountingWEB, I touched on the potential for artificial intelligence (AI) to impact on advisory work. I mentioned H&R Block’s use of IBM Watson and the way AI is being used to analyse complex legal documents for tax-sensitive points. There is more.
Earlier this year for example, KPMG partnered with Blue J to launch an AI-powered tax tool in the UK. Blue J is already well-established in the USA. It is a predictive analysis tool designed to conduct – and speed up – technical analysis and navigation of complex legislation. It claims the ability to predict tax scenario outcomes with over 90% accuracy and gives a confidence level for the predicted outcome. It provides a detailed report to set out its analysis, so placing it at the “transparent” end of the transparent/opaque scale (a see-through box rather than a black box). Where exactly a product sits on that scale is important when assessing who is responsible if something goes wrong.
Advanced AI doesn’t simply rely on being able to analyse legislation, information in documents or case-specific facts; it can take account of factors such as seasonality and past experience. The technology is already being deployed on a range of platforms, from smartphones running document scanning apps to the complex systems used by multinational businesses. It has the ability to identify tax-critical information in government guidance or legislation as it is issued and to rapidly alert those who need to act on it. This is especially useful to businesses operating across multiple jurisdictions.
Tax authorities are using AI to identify potential enquiry cases. Tax administrations in over 70% of Organisation for Economic Co-operation and Development (OECD) member countries are now reportedly using AI and machine learning for data analysis. France, for example, was recently reported to have used AI to analyse aerial photographs for dwellings with swimming pools in order to ensure that the related local property taxes were being paid. India has incorporated AI into the administration of the Goods and Services Tax (GST). Brazil has trialled the use of AI to select the most appropriate letter to send to taxpayers and Singapore has used AI to personalise tax guidance.
What prompted me to write more on this topic was reading about ChatGPT. This newly released chatbot employs AI that has been trained using reinforcement learning from human feedback (RLHF). It operates in a conversational way and I couldn’t resist trying it. Initially, I asked it to explain the difference between tax avoidance and tax evasion and then whether AI could give tax advice. Both answers were concise and on the button.
I then asked two questions that I posed in my last article (it seemed only fair to ask for an opinion from, as it were, the horse’s mouth): here they are, along with ChatGPT’s answers.
Q: If AI gave tax advice and the advice was wrong, who would be responsible for the consequences?
ChatGPT: If AI gave tax advice and the advice was wrong, the responsibility for the consequences would depend on how the advice was used and who was relying on it. If the advice was provided by a tax professional or a company offering tax services, and the advice was followed without verifying its accuracy, the tax professional or company could potentially be held liable for any resulting errors or losses. However, if the advice was provided by an AI system that was not trained or supervised by a qualified tax professional, and the advice was followed without verifying its accuracy, the individual or business relying on the advice would likely be held responsible for any errors or losses. In general, it is always important to verify the accuracy of any tax advice, whether it is provided by a human or an AI, before relying on it to make decisions.
Q: If AI can give tax advice, will there still be a role for human tax advisers?
ChatGPT: Yes, even if AI systems are able to give tax advice, there will still be a role for human tax advisers. While AI systems may be able to process large amounts of data and identify patterns, they may not be able to provide personalised advice or take into account an individual's specific circumstances. Human tax advisers, on the other hand, are able to provide personalised advice and take into account an individual’s unique situation, which can be important when it comes to making tax decisions. Additionally, human tax advisers are able to provide guidance and support throughout the tax process, which can be particularly valuable for individuals and businesses who are new to the tax system or have complex tax situations. In short, while AI systems may be able to provide some assistance with tax advice, there will always be a need for the expertise and personalised service provided by human tax advisers.
What the future holds
I remember listening to a programme on the radio many years ago about expert systems – systems that would allow a layperson asking questions in plain language to obtain an answer on a technical area such as tax. It made me wonder whether I would have to change career, but in the event expert systems did not intrude on tax advice to any material extent. Part of the reason was that expert systems were both costly and time-consuming to design, involving complex decision matrices.
AI is a very different proposition. It is already making inroads both for tax advisers and for tax authorities. ChatGPT shows just how much of a game-changer it could be.
It is reassuring though that ChatGPT reached broadly the same conclusion as I did in my last piece: that there will always be a need for a human’s expertise when giving tax advice.
You might also be interested in
Paul Aplin was for many years a tax partner with an independent West Country firm. He is a past president of ICAEW, a former Chair of the ICAEW Tax Faculty, a member of CIOT Council and the Tax Technology Committee of CFE. He is a non-executive director of three companies, a member of HMRC’s Admin Burdens Advisory Board and the OTS Board....