Warning over hidden risks of AI

Shropshire taxpayers have been warned that despite the benefits of artificial intelligence and the opportunities it creates, it can also bring hidden risks.

Natalie Bate, from Dyke Yaxley Chartered Accountants in Shrewsbury, said AI had rapidly woven itself into everyday life, offering speed, convenience and an endless stream of information. But she warned that when it comes to tax advice, that convenience can come at a cost.

“AI tools and social media are fast becoming the modern equivalent of ‘Dave from the pub said’ – well-meaning, confident, and often completely wrong.”

Natalie warned that while platforms such as ChatGPT could be a useful starting point, they drew information from across the internet, including sources that may be inaccurate, outdated or entirely fabricated. She said even accountancy‑specific AI tools had been known to provide misleading or incomplete guidance.

“Tax is nuanced and constantly changing. AI can only work with the data it has access to, and that data isn’t always correct. It might give you part of the picture, but rarely the full one. That’s where costly mistakes begin.”

Recent tribunal cases highlight the risks. In Elden v HMRC and Omar Rafique v HMRC, taxpayers relied on AI‑generated arguments to support their appeals. The tools confidently produced case law and legal points that were not only incorrect but entirely invented.

“These cases show the real‑world consequences of trusting AI without professional oversight,” said Natalie.

“Social media is also adding fuel to the fire. Instagram and TikTok have seen a surge in “tax hack” accounts promising dramatic savings through attention‑grabbing headlines. But behind the clickbait, the detail is often missing – or wrong.

“These posts are designed for views, not accuracy. Following them blindly can lead to penalties, unexpected tax bills, and a great deal of stress.”

Dyke Yaxley has also seen HMRC taking a tougher stance when errors arise from DIY tax returns.

“When we submit disclosures to correct previous mistakes, HM Revenue and Customs is increasingly asking where the original advice came from,” said Natalie. “They’re seeing a clear rise in errors linked to AI‑generated guidance.”

Natalie said the message was clear – tax advice is never one‑size‑fits‑all.

“Your circumstances, income sources, family situation and future plans all shape the right approach. Generic online advice – whether from AI or social media – simply can’t account for that.”

Natalie said taxpayers should treat AI as a tool, not a substitute for expertise. “Use it for ideas, but always speak to a qualified tax adviser before acting. It’s the best way to protect yourself from unnecessary risks and ensure you’re making informed, compliant decisions.”

Pictured: Natalie Bate of Dyke Yaxley Chartered Accountants in Shrewsbury