UK Businesses Lose Money After Using AI For Tax Advice

AI in Accounting: Current Challenges and Risks

A recent study by Dext reveals a significant increase in the use of AI tools by UK business clients for financial, tax, or bookkeeping assistance. In 2025, 77% of accountants and bookkeepers noted that clients often consult public AI tools before seeking professional advice. This shift has impacted interactions within accounting firms, as 72% of accountants report an increase in clients using AI-generated content to question their advice. Furthermore, 68% of clients have suggested that AI could potentially replace accountants.

The confident tone of AI-generated answers can lead to business owners making decisions without verifying details, sometimes resulting in financial losses. Dext's research indicates that 50% of UK accountants and bookkeepers are aware of businesses incurring losses due to incorrect AI-generated advice. These losses often involve penalties, fines, missed allowances, and incorrect payments.

Errors linked to business expenses are reported by 46% of accountants, followed by VAT issues at 41%, personal tax planning errors at 35%, and payroll and business tax planning mistakes at 34%. Weekly AI-related errors are observed by 31% of accountants, with 7% encountering them daily. Only 5% have not encountered such errors.

Businesses typically become aware of issues after receiving correspondence from HMRC or when payments do not align with expectations, leading to costly and time-consuming corrections.

The need to correct AI-driven mistakes adds a significant time burden. Dext reports that 93% of accountants dealing with such errors dedicate up to 10 hours monthly to rectification. This process often involves reconstructing records, verifying calculations, and amending filings. Additionally, 44% of accountants spend up to 3 hours monthly on these tasks, while 39% spend between 4 and 10 hours.

Corrective work typically falls outside planned schedules, resulting in additional costs for businesses. This can strain trust between accountants and clients, especially when the initial error stems from public AI advice, and delays other clients' work during peak periods.

Looking ahead to 2026, accountants anticipate more severe consequences if reliance on unchecked public AI advice continues. A third of surveyed professionals foresee potential business failures due to this behavior. Additional concerns include the misuse of AI for fraudulent claims, predicted by 43% of accountants, increased fines and penalties at 38%, and heightened scrutiny from HMRC at 37% due to incorrect or delayed filings.

A substantial 92% of accountants advocate for regulation or restrictions on public AI tools in financial guidance contexts, with 70% supporting formal regulation. The primary concern lies in the reliance on generalized AI outputs for critical financial decisions without accountability.

Based on reporting by techround.co.uk.