Why ChatGPT’s 64% Accuracy Isn’t Good Enough for Your Bolton Business Tax Returns

More than half of UK adults now use ChatGPT for financial advice. But when Which? tested it on tax questions in November 2025, it scored just 64 percent accuracy. For Bolton and Manchester businesses managing Self-Assessment or VAT returns, that one in three error rates could cost thousands in HMRC penalties.

The Real Cost of AI Tax Mistakes

Which? researchers deliberately tested ChatGPT with a trap question:

“How should I invest my 25,000 annual ISA allowance?”

The actual limit is 20,000. ChatGPT failed to spot the error and provided detailed advice on investing the fictional amount. Anyone following that guidance would breach HMRC rules.

A December 2025 Dext survey of 500 UK accountants found that 50 percent knew businesses that had suffered direct financial losses from AI-generated tax advice. Common problems included incorrect expense claims, VAT errors, and missed allowances. Nearly one third of accountants see AI-driven mistakes every week.

When AI Invents Tax Law

The risks go beyond simple errors. In December 2023, Felicity Harber lost her HMRC penalty appeal after submitting nine AI-generated case summaries. The cases looked legitimate with proper names and dates. None of them existed. Judge Anne Redston found the AI had fabricated entirely false legal precedents.

For Bolton businesses facing HMRC investigations, this demonstrates catastrophic risk.

Why ChatGPT Sounds Confident When Wrong

General-purpose AI predicts plausible-sounding text based on patterns, not verified facts. A 2025 study in PNAS Nexus found that detailed AI reasoning increases user trust but not accuracy.

The AI cannot signal when it is guessing. It does not know if UK tax rules changed last April. It has not assessed your specific circumstances. But it provides answers anyway.

That is where the danger lies.

No Protection When It Goes Wrong

When regulated accountants give incorrect advice, you have professional indemnity insurance, regulatory oversight, and compensation schemes.

ChatGPT offers none of this.

The FCA stated in December 2025 that LLM-based answers are not regulated advice. OpenAI's terms clearly state that information is provided without responsibility.

When AI advice triggers HMRC penalties, there is no one to hold accountable except yourself.

When AI Is Useful and When It Is Dangerous

Safe uses:

Understanding basic concepts such as

What is VAT?

How does Self-Assessment work?

Dangerous uses:

Decisions requiring knowledge of your personal circumstances such as

Should I register for VAT?

Can I claim this expense?

ChatGPT does not know your turnover, profit, or tax position. It will still give you an answer.

Before Acting on AI Tax Advice, Ask Yourself

1. Would I bet 1,000 pounds that this is completely accurate?
2. What happens if this is wrong? Minor inconvenience or HMRC penalties?
3. Is this information that can be verified, or advice that depends on my situation?

If the downside is significant, professional advice is the safer option.

Get Professional Advice You Can Trust

At YRF Accountants, we provide reliable tax filing and advisory services to businesses across Bolton and Manchester.
Unlike AI chatbots, we:

• Understand your specific financial circumstances
• Stay up to date with HMRC regulations
• Carry professional indemnity insurance
• Take responsibility for the advice we give

The cost of correcting AI mistakes often exceeds the cost of getting professional advice from the start.

Whether you need help with Self-Assessment, corporation tax, VAT compliance, or structured tax planning, our qualified team ensures everything is accurate and compliant.

Contact YRF Accountants Today

Do not let a chatbot's 64 percent accuracy rate cost your business thousands.

Get accountable advice backed by professional standards.