This article explains a proposed change to HMRC's information powers that could widen the digital information HMRC can ask taxpayers to hand over, which commentators say could include AI chatbot histories. HMRC has published the change as draft legislation, but as of 12th November 2026 it is not yet law, and the final wording could change.
What it means
HMRC already has powers to ask for information and documents when it needs to check a tax position. HMRC has published draft legislation, due to be included in Finance Bill 2026-27, that would widen the digital information HMRC can demand to any "relevant thing". The draft defines this as "anything where there is to be found information of any description". It does not mention AI by name, but commentators say it could cover AI chatbot histories, such as conversations where you asked a chatbot about tax, income or expenses.
The Budget 2026 documents say the change will take effect from the date Finance Bill 2026-27 receives Royal Assent. Until then, please treat this as a proposal and not as settled law.
Who it affects
In principle, anyone whose tax position HMRC is checking:
- Sole traders
- Limited company directors
- Landlords
- Startups and small business owners
Most taxpayers are never asked for anything beyond routine records. An information request usually follows an enquiry or a check, and it must relate to the tax position being looked at.
Current rules and requirements
Information notices
Under Schedule 36 of the Finance Act 2008, HMRC can issue an information notice requiring a taxpayer to provide information or documents that are reasonably required to check their tax position.
What counts as a document
For HMRC information powers, a "document" already covers information recorded in any form. That includes electronic records such as emails, spreadsheets and digital files. So digital material is not outside HMRC's reach today. What the draft legislation would change is the wording, widening it to any "relevant thing".
Appeals
Taxpayers can generally appeal against an information notice. The exception is where the notice asks for statutory records, meaning records the business is legally required to keep.
Penalties
Penalties can apply if you fail to comply with an information notice. HMRC's guidance sets an initial penalty of £300, followed by a daily penalty of up to £60 a day until the information or documents are provided.
Important dates, thresholds and figures
| Item | Position |
|---|---|
| Current power | Schedule 36, Finance Act 2008 |
| Proposed change | Widening to any "relevant thing" (draft legislation for Finance Bill 2026-27) |
| When it takes effect | From Royal Assent to Finance Bill 2026-27 (not law as of 12th November 2026) |
| Penalty for not complying | £300 initial, then up to £60 a day |
Worked example
Imagine a sole trader whose expenses are being checked. HMRC issues an information notice asking for evidence supporting a large claim. Under current rules, emails, spreadsheets and digital files about that claim could fall within the request. If the proposal became law, HMRC's wording could in principle reach other digital material connected to the check, which might include a chatbot conversation where the trader worked out how to treat the expense.
This is illustrative only. How the final law would be applied in practice is not something we can confirm yet.
Common mistakes
- Assuming digital records are private. Emails, spreadsheets and digital files can already be requested.
- Treating a proposal as law. Check the current status before changing how you work.
- Deleting records in a panic. Do not delete anything because of a news story. Destroying records you are required to keep can cause real problems.
- Ignoring a notice. Penalties can apply for not complying, so respond within the deadline or ask for advice.
- Relying on chatbots for tax answers. AI chatbots can give inaccurate or out-of-date tax information and are not a substitute for professional advice.
Frequently asked questions
Can HMRC ask for my chatbot history today?
The law already treats a "document" as information recorded in any form, including electronic records. Whether a particular chatbot history falls within that, and whether it is reasonably required for a check, depends on the circumstances. If you receive a notice, ask for advice.
Can I appeal an information notice?
Generally yes, but not where the notice asks for statutory records that you are legally required to keep.
What happens if I do not comply?
Penalties can apply: an initial £300, then up to £60 a day until you comply.
Should I stop using AI tools?
Not necessarily. They can be useful for drafting and organising ideas. Just do not rely on them for tax conclusions, and keep proper business records separately.
Practical next steps
- Keep clear, organised business records in the usual way.
- Check the current status of Finance Bill 2026-27 on GOV.UK or Parliament's website.
- Verify any tax answer from a chatbot before acting on it.
- If HMRC sends an information notice, note the deadline and get advice before responding.
- Do not delete records you are required to keep.
How 360 Accounts can help
If you receive an HMRC information request, or you simply want your records in good order, we can help you understand what is being asked and respond properly. We can also review any tax position you have worked out using an AI tool.
Official references
- GOV.UK: Reforming information powers and modernising computer records law (https://www.gov.uk/government/publications/reforming-information-powers-and-modernising-computer-records-law)
- GOV.UK: Budget 2026, overview of tax legislation and rates, section 1.89 (https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar)
- GOV.UK: HMRC Compliance Handbook, information powers penalties (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch26620)
- Finance Act 2008, Schedule 36, on legislation.gov.uk