Latest news with #taxadvice
Forbes
4 days ago
- Business
- Forbes
Can AI Give Tax Advice? Legal Limits And Regulatory Risks Explained
AI chatbot usage and concepts People turn to AI for just about everything these days—from workout routines to business strategy. So it's no surprise they ask about taxes too. Some questions are straightforward, like 'How does VAT apply to low-value imports?' or 'What is ViDA?' Others are more complex, involving detailed financial scenarios and asking how to handle them from a tax perspective. When you ask a large language model (LLM) for tax advice, it usually gives an answer. It may include a disclaimer encouraging you to consult a real expert, but it rarely refuses the request. That's where things start to get complicated. In many countries, applying tax law to someone's specific situation is legally considered tax advice and that's often a regulated activity. The rules vary depending on where you are. In the Netherlands, anyone can offer tax advice. In Germany, only licensed tax advisors can. Legal advice is also restricted to licensed lawyers. So what happens when the advice comes from a machine and not from a person? What the Courts Say About Software A German court ruling has already addressed this issue, offering a useful starting point for understanding where automation ends and regulated advice begins. While the case didn't involve LLMs, it still provides valuable insights. Germany's Federal Court of Justice (Bundesgerichtshof) reviewed a contract-generating platform that allowed users to create legal documents by answering a guided questionnaire. The service was advertised as producing 'legal documents with lawyer-level quality'—faster and cheaper than a real lawyer. The question was whether this kind of software crossed into regulated territory by offering legal advice without a license. The court ruled that it didn't. It held that the platform was lawful because it didn't analyze legal issues on a case-by-case basis. Instead, it used fixed logic, relied on factual input from users, and followed a set decision tree. There was no legal interpretation, no discretion, and no human oversight. The court compared it to a sophisticated form book—prewritten templates, not personalized legal counsel. The court also emphasized the user's role. It found that users were not misled into expecting full legal services. They understood that the output was a standardized document generated without professional legal review. Users knew they were responsible for the accuracy of the information they provided. Because of this, the court concluded that the service didn't qualify as unauthorized legal practice. However, the court did draw a firm line on how the tool was marketed. While the platform itself was allowed, promotional language that claimed to deliver 'lawyer-quality' results or positioned the service as equivalent to legal representation was ruled misleading. The takeaway: the automation may be legal, but how it's presented to users must be honest. So What About AI? The German court drew a clear distinction—automated tools are permitted as long as they offer general guidance, not case-specific legal advice. If a tool behaves like a structured manual with templates and logic paths, it's usually safe. But if it interprets tax rules based on someone's personal data, it may cross into regulated territory. Most tax software keeps it simple. It follows a fixed path and provides logic-based results. But LLMs can go further. They respond to user input in a conversational, personalized way. If the output applies tax law to individual facts, even unintentionally, it could qualify as tax advice under strict regulatory standards. Still, a strong case can be made that LLMs aren't giving tax advice—at least not in the legal sense. For one, LLMs are not legal entities. They can't be licensed, held accountable, or sanctioned. They don't act with legal intent. Like calculators or tax calculation engines, they're tools—not advisors. Second, the user is in control. They ask the questions, guide the interaction, and decide how to use the output. LLMs don't request documentation, question the facts, or assess risks like a licensed advisor would. Third, the answers are probabilistic. LLMs don't reason through the law; they predict what might be a helpful reply based on past patterns in training data. They don't understand legal rules, evaluate ethics, or grasp the nuance of financial and personal context. From the user's point of view, expectations are low. Most people know LLMs hallucinate. They understand that these systems occasionally produce false or misleading information. As a result, many use them as low-cost assistants but not as replacements for professional help. And most LLMs aren't marketed as legal advisors, which helps keep them out of regulatory trouble. It's a different story for tools that claim to offer legal certainty or 'lawyer-quality' advice—that kind of positioning can trigger legal obligations. The Bottom Line LLMs generate text based on patterns in the data they were trained on. They don't apply laws but predict what sounds like a useful response. That's not tax advice. That's automated text. And it's up to humans to treat it that way. As both knowledge and reasoning become automated, tax advisors must redefine their role — not as knowledge holders, but as interpreters, strategists, and ethical decision-makers. Their value no longer lies in simply knowing the rules, but in interpreting them, applying judgment, and asking the hard questions that AI can't. The goal isn't to compete with AI but to work with it. The opinions expressed in this article are those of the author and do not necessarily reflect the views of any organizations with which the author is affiliated.
Yahoo
02-07-2025
- Business
- Yahoo
How to invest £200 a month in UK shares to target a £42,050 second income
Investing £200 a month can be a powerful way to build wealth and target a substantial second income. This is especially true when we harness the power of compounding. Compounding means investors earn returns not just on their original investments, but also on the returns those investments have already generated. Over time, this 'interest on interest' effect can accelerate growth dramatically. If anyone consistently invests £200 every month and achieves an average annual return of 10% over the long run, the portfolio could grow to over £841,000 in 36 years. Yes, it takes time, but the longer we leave it, the faster it will grow. The maths behind this is rooted in the compound interest formula, where each year's gains are added to your principal, so the base for future growth keeps getting larger. After 36 years, an investor could look to allocate their portfolio towards companies with paying dividends or simply buy debt. With a 5% annualised yield, an investor would receive £42,050 annually. And that's tax-free. Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions. The above is great. However, none of this matters if investors make poor decisions and lose money. Protecting capital is just as important as seeking high returns. As Warren Buffett famously says, 'Rule number one is never lose money. Rule number two is never forget rule number one'. This is crucial because a large loss can be devastating. If a portfolio falls by 50%, it needs a 100% gain just to get back to where it started. That's why it's wise to focus on quality companies, ideally with strong balance sheets and sustainable dividends, and to diversify investments across sectors to reduce risk. One UK stock that I believe has a lot of potential is Melrose Industries (LSE:MRO). The aerospace manufacturer's valuation massively lags its peers despite the fact that it is the sole source supplier for 70% of its sales. That means it has an incredibly strong economic moat. Its parts also feature on all major aircraft engines. Looking ahead, Melrose has set out a plan for high single-digit annual revenue growth, targeting around £5bn in revenue and over £1.2bn in adjusted operating profit by 2029. Free cash flow is expected to more than quadruple over the next five years, reaching £600m by 2029. Management is guiding for more than 20% annual growth in adjusted diluted EPS over this period. All of this from a company valued at 14.1 times forward earnings. This also suggests a price-to-earnings-to-growth (PEG) ratio well under one. Meanwhile several peers are closer to two times or above. Risks? Well, net debt is a little high at £1.3bn. There's also the matter of execution risk as it completes its transition. Despite this, it's a stock I like a lot. It definitely deserves broader consideration. The post How to invest £200 a month in UK shares to target a £42,050 second income appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool James Fox has positions in Melrose Industries Plc. The Motley Fool UK has recommended Melrose Industries Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
News.com.au
30-06-2025
- Business
- News.com.au
Tax experts issue urgent warning as end of financial year looms
Australian taxpayers are being warned to keep up with their records as the ATO will need proof of any claimed expenses. As tax time rapidly approaches, H & R Block told NewsWire Australians should take their time and gather the right supporting documents if they are to maximise their returns this financial year. H & R Block director of taxation communications Mark Chapman had a simple message for taxpayers. 'If you can't substantiate it, you can't claim it,' he said. 'This underscores the importance of maintaining clear records — receipts, invoices, and logs — for all deductions to ensure compliance with ATO requirements.' Mr Chapman said Australians record keeping should start with maximising their work-related deductions, with the ATO letting taxpayers claim up to $300 in work-related items without receipts, although he advised to make sure they have a record in case. These include expenses on home office costs, tools and equipment for work, professional memberships and work related travel. BDO business services partner Mark Pizzacalla agrees saying if you've spent money to earn an income there's a good chance it's deductible. 'That includes working-from-home expenses, travel between jobs, uniforms, tools, professional development, and even union fees,' he said. 'Bear in mind that the ATO is increasingly data-driven and you need to keep your receipts and records to ensure that you can substantiate your claim.' He also highlights there a number of things Australians can do to make their taxable income fall prior to June 30. 'If you've been proactive before 30 June, there are a number of strategies that can help reduce your taxable income, including making a personal super contribution, making charitable donations above $2 to gift deductible recipients, or prepaying deductible amounts for certain eligible expenditures,' Mr Pizzacalla said. The calls from the tax experts come as the ATO is warning Australians to be patient with their tax returns. Last year 142,000 people who lodged in the first 2 weeks of July had to lodge amendments, or had their returns investigated and amended by the ATO to fix inaccuracies in their tax return, for example, income that had not been declared properly. ATO Assistant Commissioner Rob Thomson said that waiting until late July allows for the ATO to prefill information in your tax return. 'We know doing your tax return is something to tick off your to-do list each year, but there's no need to rush. The best time to lodge is from late July once everything is ready.'
Yahoo
27-06-2025
- Business
- Yahoo
Johnston Carmichael appoints tax director in Newcastle
Johnston Carmichael, a UK-based accountancy firm, has named Adrienne Paterson as Tax Director in its Newcastle office. Paterson brings expertise in transaction tax, having started her career at KPMG in the early 1990s in corporate tax prior to joining EY. In 2004, she joined a 'leading regional firm', where she managed transaction-based work for the past 15 years, advising on business sales, acquisitions, reorganisations, mergers, and demergers. In her new role at Johnston Carmichael, Paterson will collaborate with the firm's Transaction Tax team to enhance its profile and presence in Newcastle. Her focus will be on building relationships with business owners, entrepreneurs, and professional advisers across the North East looking for specialist support. Paterson said: 'Johnston Carmichael has an excellent reputation, both in terms of its technical capability and its culture. What attracted me was the firm's collaborative ethos, its investment in people, and the depth of tax expertise already here. 'My focus will be to strengthen our profile in the North East, particularly around Transaction Tax. 'If a business is looking to sell, restructure or expand, I want Johnston Carmichael to be the first name they think of when it comes to expert tax advice.' The appointment underscores Johnston Carmichael's ongoing investment in specialist tax services. Johnston Carmichael Tax Partner Suzanne Brownie said: 'Adrienne is a highly capable and likeable expert in Transaction Tax. She prides herself in supporting clients with clear and pragmatic advice - allowing clients to make confident and well-informed decisions. 'With a wealth of commercial experience and long-standing relationships across the North East, she is a fantastic addition to strengthen our senior tax team.' In May 2024, Johnston Carmichael expanded its Newcastle tax team with three senior tax experts. "Johnston Carmichael appoints tax director in Newcastle" was originally created and published by International Accounting Bulletin, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
24-06-2025
- Business
- Telegraph
‘My mum gave me her house while still living there – do I owe capital gains tax?'
Email your tax questions to Mike: taxhacks@ Dear Mike, I expect you will be inundated with gripes, but mine is slightly different. In short, our mum gave her house to me and my brother but carried on living in it for a further 20 years. House prices then increased before we sold it. I told my accountant and he said we had to pay capital gains tax on the increase. I asked whether her living in it might negate the whole thing but he said HMRC would not recognise the transaction for inheritance tax, but would for capital gains tax. My mum's estate was smaller than the inheritance tax allowance. I moved accountants a few years later and mentioned what had happened. This accountant took the view that I shouldn't have paid the capital gains tax but that I would now probably be 'out of time' to appeal. Nevertheless, he thought an argument might be made. I appealed to HMRC and, after waiting a year, received a letter saying I was indeed out of time, at least implicitly accepting that a claim would otherwise have been accepted. Isn't it unethical of HMRC to keep my money in this way? – Gordon Dear Gordon, This is a trap which I have unfortunately seen several people fall into. I appreciate that this was not the case for your mother but sometimes parents give their home to their adult children hoping to save on inheritance tax. This does not work because by continuing to live in the property they fall into the 'reservation of benefit rules' which means that the property remains in their estate for IHT purposes. Unless the children are also living there, the gain has no protection as a principal private residence (PPR); capital gains tax is due on the sale price less the market value when you received it from your mother. It appears that was the advice from your first accountant. However, as I suspect your second accountant was implying, there is another way that PPR can be available. Where a property is held in a trust, often called a settlement, a separate exemption can be claimed if the person living in the property is entitled to do so under the terms of the trust. This is explained in the HMRC manuals here. In normal cases with personal ownership, this relief from capital gains tax is given automatically. With a trust, however, the trustees have to make a claim to HMRC, and do so within four years from the end of the tax year of the sale. This raises two questions: was there a trust involved and, if so, was a claim for capital gains tax relief made in time? Most of us assume that a trust only comes into existence through either a document prepared by a solicitor or under the terms of a will. However, there are more ways of creating a trust. An 'express' trust can be created where three conditions are satisfied, as explained in the manuals here. This does not necessarily need to be in writing although where property is concerned it must be evidenced in writing. An 'implied' trust can come into existence through the operation of established legal principles, as explained here, including who provided the funds. There have been some recent cases on the legal issues involved as summarised in the HMRC manuals here. These were not tax cases but the legal principles reviewed are nevertheless relevant. The key issue is whether documentary evidence exists to show the background to your mother's gift of the property to you. She may, for example, have written letters to each of you explaining her plans. I imagine that she arranged the transfer of the property to you with the help of a solicitor and you may still have the papers stored in a safe somewhere, possibly at the bank. I realise that this was 20 years ago but the solicitors involved may have retained the relevant paperwork. Since this is essentially a legal issue, I asked Gary Rycroft, The Telegraph's consumer law columnist, for his thoughts. He said: 'If you have evidence as to the intention by all parties involved for your mother to still live in the house after the gift, that would be useful. Also factual evidence that she paid expenses such as council tax, or that she was named as occupier on the home insurance would point to her living there with the permission of yourselves as the legal owners.' If this hurdle could be overcome, the next issue is whether you have made a claim in time. There are some circumstances where HMRC will relax the time limit for making claims, such as where someone works overseas and retains a property in the UK. However, the four-year time limit arises from the general rule on claims and I am not aware of any guidance to inspectors to accept late claims. A claim is treated as made when it is received by HMRC, not when it is signed, dated or posted, as stated here. You say that HMRC took a year to respond to your letter but I am not sure whether this letter confirms when HMRC received your claim. You have asked about the ethics of HMRC sitting on your money. We receive many comments from readers complaining about delays in HMRC dealing with correspondence. I received a letter a few weeks ago in response to a claim I made last September, but it did at least contain an apology. However, I do not believe that anybody at HMRC deliberately sat on your letter until it went out of time, and as long as the post was timed on arrival it would have made no difference anyway. What I assume happened is that by the time you made your claim you were already outside the four-year window. I can understand your frustration but that is just the way the law works. Mike Warburton was previously a tax director with accountants Grant Thornton and is now retired. His columns should not be taken as advice, or as a personal recommendation, but as a starting point for readers to undertake their own further research.
