As of 1 January 2023, there were around 5.6 million private sector businesses in the UK, an increase of 0.8% from the previous year, as stated by the House of Commons. The number of self-employed individuals in the UK has been on the rise for the past two decades, with over four million self-employed individuals. However, due to the impact of Covid-19, there was a decline in the number of self-employed individuals from 2020-2022.
All these businesses and self-employed individuals are required to complete their tax returns annually, overseen by HM Revenue & Customs (HMRC) in the UK. Unfortunately, HMRC has been facing challenges in responding to queries due to a shortage of staff, resulting in long waiting times for calls, averaging 47 minutes.
In 2015, George Osborne announced the government’s plan to simplify tax collection through the Making Tax Digital program, which aims to streamline the process of ensuring tax returns are accurate and up-to-date. The program is expected to be fully implemented by 2025.
To address the challenges faced by HMRC, the organization is recruiting data scientists to develop generative artificial intelligence (GenAI) tools to assist tax advisors in their work. While recognizing the potential of GenAI, HMRC is taking measures to ensure the technology is used ethically and in compliance with data protection and security standards.
Automation through GenAI could help in simplifying tasks for tax advisors, allowing them to focus on more complex aspects of their role. However, human oversight will always be crucial to ensure the accuracy and fairness of information provided by AI tools.
In conclusion, while AI can enhance efficiency in tax-related tasks, there will always be a need for human expertise and oversight to address complexities and nuances that AI may struggle with. Regulations and ethical considerations will play a key role in ensuring responsible use of AI in the field of taxation.