Taxpayer uses AI to argue against penalty
One taxpayer recently decided to use AI to generate a defence against an HMRC penalty. How did things turn out for her?
Mrs Harber (H) received a penalty from HMRC for failing to notify a capital gains tax liability. She appealed to the First-tier Tribunal on the grounds that she had a “reasonable excuse”; namely that her mental health was poor. What made the appeal interesting was that H used an AI application, similar to ChatGPT, to produce a list of previous cases where an argument of a reasonable excuse due to mental health was accepted.
Upon review of the cases presented by H, the judge found a large number of discrepancies. It turned out that the application had more or less invented the cases, though there were occasional hallmarks of actual decisions present. None of the cases could be located, and the one that had “some” similarity to a real case had the wrong year, which was a case that the taxpayer had lost. The tribunal accepted that H did not know the cases had been created by the application, so there was no question of her trying to mislead deliberately. The case should serve as some relief that the robots aren’t ready to take over just yet!
After all that, the actual decision itself seems relatively boring. H did not convince the tribunal that she had a reasonable excuse for not notifying HMRC of her liability. There would have been nothing to stop her seeking advice from a (human!) tax advisor.
Related Topics
-
The IHT exemption that HMRC hides
You have the task of obtaining probate for your mother’s estate which involves completing tricky inheritance (IHT) tax forms. One of these requires you to report lifetime gifts. How might the form’s wording cause you to miss out on an IHT exemption?
-
Gifts of shares to children: direct or via a trust?
You want to give away some shares in your company to help provide an income for your children. Is it better to make a direct gift to them or should you transfer the shares to a trust with your children as beneficiaries?
-
Are work-related benefits for disabled persons tax free?
A loyal employee has suffered a disability and needs special equipment to do her job. If she also uses the equipment in her personal life, will it count as a taxable benefit for her?