Embracing AI in Tax Practices
The tax profession is rapidly recognizing the potential of artificial intelligence (AI) to reshape its workflows. According to a May 2024 survey conducted by Tolley among 446 UK tax practitioners, the integration of generative AI in tax practices is becoming increasingly prevalent.
Current Adoption of Generative AI
The survey results reveal that approximately one-tenth (9%) of tax professionals utilize generative AI in their daily tasks, while more than one-third (35%) implement it at least once a month. Furthermore, 32% of practitioners are not currently using generative AI but express plans to adopt it in the future. Only 33% stated that they have no intentions of using this technology.
Hayley McKelvey, Tax and Legal – Digital Innovation Leader at Deloitte, anticipates significant changes in the tax sector over the next year, stating, "We are only at the foothills of what GenAI can do and how much of the tax professional’s compliance and advisory work it can consume."
The Impact of AI on Tax Professionals
Bivek Sharma, Chief Technology Officer & Head of Alliances for Tax, Legal and People Business at PwC, emphasizes the transformative power of AI in the tax field. He notes, "Gone are the times where you have to spend hours, days, or even months reviewing thousands of technical documents." While AI may not possess human emotional intelligence, and we don’t have full time AI tax consultants yet Sharma believes it effectively complements human efforts. "The combination of human touch and technology allows us to accelerate deliverables, react quicker to client queries and obtain insights much more effectively than before."
Future Developments in AI Technology
Helen Whiteman, CEO of the Chartered Institute of Taxation, forecasts continual improvements in generative AI, acknowledging its rapid development over the past 18 months: "Clearly AI offers many benefits." However, Ian Hayes, President of CFE Tax Advisers Europe, offers contrasting views, emphasizing the diverse reactions to generative AI. "For technophiles, generative AI is an amazing new tool, but for technophobes, it is a disaster." He describes the current landscape as reminiscent of a new dot-com bubble, stating, "Everything is now imbued with the magic ingredient that is AI."
Preparing for the Future: The Need for Adaptation
While we are only beginning to see the immediate impact of AI in tax Hayes suggests that advisers and agents should begin future-proofing their businesses. "The tax function must be fit for purpose and embrace the inexorable advance of digital by retraining, recruiting, and maintaining an agile stance for their businesses."
Tax practitioners have identified their primary AI priorities, with 91% focusing on researching tax matters and 87% on drafting tax documents. Other tasks, such as drafting emails, were prioritized by 80% of respondents.
Leveraging AI for Enhanced Insights
Generative AI can assist tax professionals in analyzing complex data, as highlighted by Becky Shields, Partner and Head of Transformation at Moore Kingston Smith (MKS). She explains, "Generative AI can help the tax professional understand, breakdown and evaluate analysis so they better understand client circumstances and address any concerns or points of misunderstanding."
Adrian Henderson, Director of Technology and Transformation Services at Evelyn Partners, notes that AI can identify patterns and issues that may go unnoticed by humans. "Generative AI can spot patterns that humans cannot – this helps us create new business insights for our clients." The firm is exploring various applications of AI, such as mapping trial balance information for tax returns and helping interpret foreign language documents.
The Benefits for Smaller Firms
Smaller firms are also recognizing the benefits of AI integration. Michael Beart, Founding Partner of Larkstoke Advisors, asserts that generative AI can enhance productivity by allowing tax professionals to concentrate on the technical and value-adding aspects of their roles. Similarly, Phil Waller, Tax Partner at Ballards, expresses optimism about AI's potential to alleviate the burdens of report writing. He anticipates that "Accuracy of searches will increase over time to a point where it can be relied upon."
Changes in Operations Due to AI
When evaluating internal changes, the Tolley survey indicates that one-third (32%) of respondents have made adjustments in their organizations, primarily focusing on AI-related training for staff (12%), developing policies on the use of generative AI (11%), and launching AI-powered products for internal use (11%). Notably, in-house teams are leading the charge; they are more likely than private practices to have established AI policies (24% vs. 8%).
Wolff Tax: Your AI Tax Assistant
As tax professionals navigate this evolving landscape, Wolff Tax, an advanced AI tax assistant by GateAI, is here to simplify their workflows. Wolff Tax helps accountants answer tax-related questions faster by integrating HMRC Manuals, UK Legislation, and Case Law, offering a seamless and efficient tax research experience. With its AI-powered search feature, users can interact with Wolff Tax in a conversational manner, receiving immediate answers to their tax-related queries. The platform also provides audit-ready citations, generating full audit trails of research along with transparent source documentation. Additionally, Wolff Tax enables users to automate document generation, quickly creating filings, reports, and invoices with minimal clicks through automated templates and data integration. The capability to save responses as PDF files offers a reliable record of all research conducted, while the integrated knowledge base ensures seamless access to essential tax resources.
Wolff Tax delivers instant and accurate answers to tax queries, enabling users to access real-time updates on changes to HMRC Manuals and UK Tax Legislation. This powerful tool allows tax professionals to build a convenient knowledge base by saving questions and responses with citations for future reference while also simplifying the generation of necessary documents like tax filings and invoices.
Conclusion: A Shift Towards AI-Driven Tax Practices
With nearly half of in-house teams implementing changes to leverage AI for taxes, there is a strong expectation for firms to leverage generative AI to enhance efficiency. McKelvey highlights that "GenAI, when plugged into a wider ecosystem of other AI applications, platforms, and data, means tax professionals can respond to the external environment and drive real value in their organizations."
In conclusion, artificial intelligence in taxation is emerging as a pivotal force in the tax profession, paving the way for enhanced efficiency, deeper insights, and a more agile approach to client service. As tax practitioners embrace this technology, the future landscape of taxation is set to undergo profound transformation.
