UK Finance Bill 2026-27 Would Let HMRC Demand Your AI Chatbot History
The UK's Finance Bill 2026-27 would expand HMRC's Schedule 36 powers from 'computer records' to any 'relevant thing,' a drafting change tax advisers say opens the door to compelled disclosure of AI chatbot conversations.
The UK tax authority wants to audit not just your numbers, but how you reasoned your way to them.
Key takeaways
- The Finance Bill 2026-27 would rewrite HMRC's Schedule 36 information powers to cover any "relevant thing," a change tax advisers say could make AI chatbot conversations used in tax preparation legally compellable.
- Third-party notices can be served directly on AI platforms like OpenAI and Microsoft, meaning individual refusal to cooperate does not close the door.
- The same Budget package grants HMRC direct bank-account debt-recovery power from July 2029, extending a consistent pattern of enforcement expansion that self-custodied Bitcoin sits structurally outside of.
The UK government published draft legislation on 13 July 2026 that would expand HMRC's Schedule 36 information powers, replacing the existing "computer records" standard with the broader term "any relevant thing." Tax advisers say the new wording is wide enough to capture prompt histories and full conversation logs from AI tools such as ChatGPT, Microsoft Copilot, and Claude, if those tools played any role in preparing tax figures. The story was first reported by The Telegraph on 11 November 2026.
The GOV.UK Tax Information and Impact Note frames the change as modernizing existing powers for a digital world. HMRC's own spokesperson put it plainly: "This is about updating our existing information powers to reflect how tax information is now stored and processed digitally. It is not about going through everyone's use of large language models. We can only request information where we already have a lawful basis to do so." The Budget on 28 October 2026 confirmed the direction; the Finance Bill 2026-27 draft legislation collection lists the information powers reform as a named policy measure.
What the "Relevant Thing" Rewrite Actually Does
Nimesh Shah, chief executive of Blick Rothenberg, noted that HMRC has stated it wants information about "how tax figures have been produced using software or automated processes," raising the question of whether chatbot exchanges used to prepare calculations become disclosable. Seb Maley, chief executive of Qdos, was more direct: "As more taxpayers and businesses put their trust in AI to help manage their tax affairs, HMRC is making sure it isn't left behind. It wants to know not just what tax figure a system produces, but how it arrived at that number."
That is the architectural shift. Legacy Schedule 36 notices could compel documents you made or transactions you executed. The "relevant thing" expansion reaches the reasoning itself.
A conversation log is a record of how you thought about your own finances, not a receipt or a ledger entry. The state claiming the right to audit that is structurally different from anything that came before.
Non-compliance with a Schedule 36 notice carries an initial £300 penalty; failure to correct inaccuracies can reach £3,000. HMRC issued over 1,000 information notices to financial institutions in the twelve months ending March 2025 alone, per Eversheds Sutherland citing HMRC data. The authority is not shy about using these tools.
The third-party notice power is the sharper edge. Under the proposed rules, HMRC can serve notices directly on the AI platform holding your data. OpenAI, Anthropic, Microsoft, any of them can be ordered to supply conversation logs without the individual taxpayer's involvement.
Opting out at the user level means nothing if the platform holds the record. That is the same vulnerability that makes custodial financial accounts compellable: someone else holds the asset, so someone else can be served. For users who want to understand what their AI tools actually retain, the TFTC breakdown on ChatGPT privacy is worth reading alongside this.
For users who want their reasoning to stay their own, the only structural answer is a tool that cannot produce readable logs on demand. Maple, a private AI app built by OpenSecret, runs AI models inside secure enclaves, so the platform holds no plaintext conversation history to hand over.
Anne Strickland, researcher at the Taxpayers' Alliance, called the proposal "a deeply intrusive overreach by the taxman," adding that HMRC "already has sweeping powers, and expanding them further risks trampling over the privacy of ordinary Britons."
The Trajectory Is Not Ambiguous
The GOV.UK OOTLAR for Budget 2026 confirms the AI-history power sits alongside a second measure: from July 2029, HMRC gains the ability to recover lower-value tax debts directly from bank accounts of taxpayers who have repeatedly failed to engage. AI chatbot logs today. Direct bank account access in three years. The £59 billion tax gap cited in Budget documents is the stated justification driving both measures.
GOV.UK's own policy paper notes the Schedule 36 changes are partly driven by OECD information-exchange standards, meaning comparable powers are likely coming to most developed-world tax authorities. This is not a UK-specific story. The AI privacy timeline shows how quickly these precedents travel.
Self-custodied Bitcoin sits structurally outside the bank-account seizure vector. There is no custodian to serve. The enforcement sweep being built in the UK, and mirrored through OECD channels globally, is a live demonstration of why that matters.
What to Watch
The Finance Bill is expected to receive Royal Assent by mid-2027, with powers taking effect from that date per GOV.UK's operative-date language. The falsifiable test: if the enacted bill text includes an explicit carve-out exempting conversational AI logs from Schedule 36 notices, or if HMRC publishes binding guidance confirming chatbot histories are out of scope, the "relevant thing" expansion is narrower than advisers currently read it. If neither condition is met, and the powers pass as drafted, the question becomes how quickly the first third-party AI platform notices are issued.
Sources
Frequently Asked Questions
Does HMRC currently have the power to demand AI chat history?
Not yet. Under the existing Schedule 36 / Finance Act 2008, HMRC can require information or documents "reasonably required" to check a tax position. The proposed "relevant thing" wording in the Finance Bill 2026-27 is what opens the door to AI conversation logs. The power is not yet law.
Can deleting ChatGPT history protect taxpayers?
Probably not, once an enquiry is open. Deliberate destruction of potentially disclosable material creates its own legal exposure. More importantly, the third-party notice power lets HMRC go directly to the AI provider, bypassing the individual entirely. If the platform retains logs, deletion on the user side may not remove the record from HMRC's reach.
Does this only affect UK taxpayers?
No. GOV.UK's policy paper explicitly states the reforms are partly driven by OECD information-exchange standards. Comparable powers are likely to follow in other jurisdictions that participate in the OECD framework, which covers most of the developed world.
