Will chatgpt transform how we process tax?

Will ChatGPT transform how we process tax?

Generative artificial intelligence such as ChatGPT will have significant implications for accountants but AI tools need training to be a true expert in tax and accounting, argues Russell Gammon, chief solutions officer, Tax Systems

Since ChatGPT was unleashed on an unsuspecting world in November last year, the technology landscape has changed irrevocably. With millions of registered users within weeks, it has been the fastest growing and most popular website in history. And, let’s be honest, it is particularly impressive.

Ask it a question and it will answer it in natural, grammatically correct paragraphs. It is both an advanced contextual search engine and a powerful tool that can support countless professions.

A brave, new, imperfect world
So, what does this mean for the tax professional? We all know that tax and accounting typically involve a lot of routine, repetitive, manual work. Whether it’s checking thousands of invoices for allowable corporation tax expenses or using Excel to track spending, there are countless everyday tasks that can be automated with minimal fuss.

In fact, research conducted by University of Pennsylvania suggests that more than 50% of the jobs done by a tax professional will be impacted by GPT.

Bear in mind, however, that it is not perfect. Even its latest iteration, GPT-4, makes mistakes when asked about unfamiliar subjects. Yet, it does so with such confidence that it can be deceiving.

It will rarely tell you it doesn’t know; instead, it will create a plausible, well-written answer based on the trillions of data points it can access. What we don’t yet know is how correct it is.

Let’s say it is 60% correct out of the box; with training in specific sectors could that easily rise to 98%+? Does that mean that HMRC will consider returns that are 98% correct as ‘good enough’?

Automate tax tasks
Imagine an AI ‘helper bot’ that is able to automate the majority of tax tasks, then flagging instances where it is unsure, for a person to impart their expert judgment. This will free up enormous amounts of time for tax professionals. A few errors might creep through but this is already the case with human error.

As it continues to gather data by the terabyte, doubtless many of these errors will be eliminated. In fact, the latest version finishes in the top ninth percentile for passing the NYC Bar Exam – a marked improvement on the earlier GPT-3.5 release.

Generative AI, therefore, already has the potential to be better than the best lawyer or doctor, it is easy to imagine it quickly learning the ropes when it comes to tax – in any country.

Remember, though, that for the foreseeable future, there is still a requirement for a quality control gatekeeper. Yet, the point is that GPT can perform much of the monotonous heavy lifting, and flag the incidents that it cannot fulfil for further human intervention.

The ambition is to augment and complement the human role, not replace it. So, we don’t have to spend the day manipulating spreadsheets and can add more creative, skilled, strategic value elsewhere.

Where will it lead?
GPT is already transforming how organisations work, from marketing to law to education. In some sectors, it might currently lack specific knowledge but that will surely change as it continues to learn and grow.

With the right approach and training, anything is possible. That means tax tasks that used to take hours to perform can be done within minutes.

So, what will we do with all that extra time? We’ll focus further up the scale on more complex issues and addressing the non-binary, grey areas, which are open to interpretation and non-codifiable. The days of Excel spreadsheets and copy and pasting are over. Tax professionals in general are being asked to take on more and more tasks, so the advance of AI will free up the necessary time to complete these tasks.

The frustration of never-ending grunt work is surely at an end with these new developments. Perhaps the most important point we haven’t discussed is that ChatGPT is cost effective, unlike some other AI tooling. That’s certainly not the case for most off-the-shelf tax software solutions, many of which will be scrambling in development to integrate elements of GPT or similar.

When any business has the potential to freely access such a powerful tool, it really is a transformative gamechanger for the industry. It’s time to switch to ‘manager mode’ – let GPT do the grunt work and you can apply your expertise to the answer.