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.
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1stopVAT · 2 days ago
UK: HMRC is consulting on expanding deemed supplier rules for online marketplaces to include UK-based vendors, aiming to curb VAT fraud. The consultation will run until 18 August 2026, and stakeholders are invited to submit views.
1StopVAT · 3 days ago
UK: The First-tier Tribunal ruled that HBS Enterprises Ltd, a UK-established business, remains liable for VAT on marketplace sales, despite HMRC’s misclassification as a non-established taxable person. The ruling confirms that the deemed supplier provision does not apply when the vendor is established in the UK, and that double taxation is avoided.
RTCSuite · 4 days ago
The UK will require all VAT invoices to be issued in a specified electronic format from 1 April 2029, covering B2B and B2G transactions. Peppol will serve as the core interoperability network, and NHS England already mandates PEPPOL-compliant invoicing for its suppliers.
UK Government · 4 days ago
The UK HMRC announces simplification of the Capital Goods Scheme effective 29 July 2026. Computers and computer equipment will be excluded and the expenditure threshold for land, buildings and civil engineering work rises to £600,000.
Law360 · 5 days ago
The UK Upper Tribunal ruled that dental aligners are not exempt from VAT under the dental prostheses provision. The decision reverses a lower tribunal ruling and means dental practices must charge VAT on aligners.
Law360 · 6 days ago
UK: The London appeals court has ruled that alternative education providers can claim a VAT exemption for their services. The decision overturns HMRC's earlier denial and may affect VAT treatment for educational institutions.
Key Takeaways
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.
Primary source
Read the full article at VATCalcThis summary was published on VATfaqs.com on 3 February 2026. It relates to VAT developments in United Kingdom. The original source is VATCalc.
