tod-Copilot aims to reduce AI risks for tax firms

Accountants’ reactions to the swift rise of generative artificial intelligence (AI) such as ChatGPT range from the fearful (‘will it take our jobs?’) to the optimistic (‘it should be able to save us some time’).

While this new breed of AI tools has generated a lot of hype and attention, many accounting professionals have taken a watching brief, citing fears of “hallucinations” (mistakes or made-up statements), out-of-date information and data security concerns.

When it comes to AI’s application to tax, experts are in agreement there’s no substitute for the experience and knowledge of a human, particularly when it comes to subtle interpretation or judgment around complex issues. However, given the breadth and depth of AI’s capabilities, there are ways in which it can provide efficiencies for tax advisers today and in the future.

tod-Copilot: Built like ChatGPT, designed for accountants

Fresh from announcing its tax review automation tool, AI specialists Tax on Demand (tod) have released tod-Copilot, the developer’s own large language model (LLM) trained on HMRC’s current tax guidance and manuals.

LLMs are a new generation of AI tools designed to mimic human intelligence. Trained on large-scale datasets that contain potentially billions of parameters, LLMs are programmed to ingest and understand this data, then summarise or generate new content based on user input  – for example, answering users’ questions about the information.

Nick Stobbs, CEO and co-founder of Tax on Demand told AccountingWEB: “Navigating HMRC manuals and guidance is manually intensive, time-consuming and economically inefficient. They contain a huge amount of information. In fact, there are 154 manuals, with 54,904 active pages and more than 27 million words.

“Keeping on top of all this information is a huge task and the guidance is regularly updated, with over 3,623 updates this year alone, and 797 new pages added just in 2023,” continued Stobbs.

As shown below, tod-Copilot is designed to provide fast, accurate answers to technical tax questions, citing relevant HMRC guidance where appropriate.

“We know there are challenges using ChatGPT, so our tool uses the most up-to-date source information (as of 18 September 2023) whereas ChatGPT’s latest free version is trained on data from November 2021,” continued Stobbs.

“We’ve reduced the risk of incorrect, irrelevant or 'hallucinated' answers by optimising our tool to respond using information from HMRC manuals. The responses also reference HMRC source documents so you can verify the information independently within a wider context.“

A gamechanger for accountants and tax professionals

Tax expert Paul Aplin, who has been consulting with the tod team to help develop the Copilot tool, believes that generative AI could be a game-changer for tax professionals.

“Someone recently likened its impact to that of the pocket calculator. 40 years ago, being able to add up a column of figures by hand was a core skill for an accountant, but the calculator made that skill redundant,” said Aplin. “Generative AI will fundamentally change the way we research questions and force us to acquire new skills to ensure that we can judge the accuracy and value of the answers it gives us.”

Stobbs added, “The release of tod-Copilot is the latest step in our mission to build tools powered by AI and automation technologies that empower accountants and enable them to better serve their clients”

“We know that there are limitations with the beta version, and we plan to make regular model updates to improve in many areas,” he added. “But we also hope that by providing an accessible interface to tod-Copilot, we will get valuable user feedback on issues that we are not already aware of. 

“We are excited to carry the lessons of this release into the deployment of more capable systems, and in time to our core decision automation platform that automates the client review process to instantly identify the tax advice clients need.”

Tax on Demand’s tod-Copilot is currently in its testing phase, and the developer is releasing it to get users’ feedback and learn about its strengths and weaknesses. During this research period, usage of tod-Copilot is free. Try it now by visiting the Copilot page at the Tax on Demand site.