HMRC released guidance on 28 January 2026 for developers of tax software that use generative AI. The guidance sets five mandatory principles—transparency, reliable source data, human oversight, security/GDPR compliance, and ethical AI with continuous auditing—to ensure AI outputs are trustworthy and legally grounded. Compliance requires clear disclosure, audit trails, limited data sources, and ongoing monitoring of models.
The guidance lists transparency, reliable source data, human oversight, security/GDPR compliance, and ethical AI with continuous auditing as the five mandatory principles.
HMRC published the guidance on 28 January 2026.
Acceptable data sources are official HMRC publications, primary legislation, and established case law; generic web content is not acceptable.
Software must prompt users to review outputs, allow corrections, provide challenge mechanisms, flag complex scenarios, and recommend professional advice.
HMRC expects compliance with UK GDPR, privacy by design, a secure software development lifecycle (SSDLC), and clear visibility to users on how their data is processed.
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UK Government · 5 days ago
HMRC’s guidance explains that intermediaries can register for the Import One‑Stop Shop (IOSS) scheme from 1 April 2026 and must submit a monthly IOSS VAT return on behalf of each client. The return must capture VAT on low‑value imports to EU and Northern Ireland consumers, use ECB exchange rates, and requires nil returns if no sales occur. Intermediaries must also keep 10‑year records and can correct returns within three years.
Law360 · 7 days ago
A London appeals court dismissed a UK telecommunications provider’s bid to recover £51.1 million in VAT payments, agreeing with a lower court that the VAT is owed when the provider supplied services. The decision confirms the provider cannot recover the VAT paid on its telecom services.
Bloomberg Tax · 7 days ago
The Upper Tribunal ruled that Lycamobile UK must pay more than £50 million in VAT, requiring the operator to charge VAT on the full price of prepaid mobile bundles at the point of sale, rather than only on services actually used. The decision, dated 12 Feb 2026, overturns Lycamobile's previous VAT calculation method.
UK Government · 8 days ago
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Seeburger · 12 days ago
The UK will require all VAT invoices to be e‑invoiced by 2029, mandating machine‑readable formats and accredited transmission. The article outlines the scope, Peppol alignment, and a step‑by‑step timeline for 2026‑2028 to help finance, IT and procurement prepare. It highlights key milestones such as selecting an access point, adopting a canonical data model, and piloting with trading partners.
TaxJournal · 12 days ago
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