IRIS Software adds AI tax discrepancy detection for UK accountants

By Vriti Gothi

IRIS Software Group has launched the first phase of an AI-powered tax anomaly detection tool, designed to reduce preparation time and errors on UK tax returns, as accounting firms face increasing workloads and stricter compliance expectations.

The new capability is integrated into IRIS Elements and IRIS Accountancy Suite at no additional cost to customers. Built using GPT-4.1 and deployed through Microsoft Foundry, the tool identifies discrepancies in tax returns by comparing current returns with historical data and flagging issues such as unexpected income fluctuations, missing dividend or interest income and manual data entry errors before submitting them to HMRC.

IRIS estimates that the tool can reduce the time required to prepare a personal tax return from approximately four hours to just 90 minutes. Across its more than 13,000 UK accountancy practices, the company expects up to six million hours to be returned to the profession once all planned phases have been fully deployed.

The launch marks a strategic shift for IRIS, which is positioning itself beyond traditional compliance software and focused on becoming an AI-enabled tax preparation partner. It also represents the first phase of a multi-million pound investment aimed at embedding AI across the company’s flagship platforms.

“This is one of the first solutions in the industry that is purpose-built for UK tax law and actually understands HMRC rules and accounting workflows,” said Jonathan Priestley, Managing Director for Global Accountancy Solutions and Transformation at IRIS Software Group. He added that the idea is to provide companies with AI capabilities that function as a “trusted partner” rather than a standalone function.

Two more phases are planned over the next twelve months. Phase two will introduce automated validation against HMRC rules and document extraction from sources such as P60s and payslips, while phase three is expected to enable post-filing monitoring and AI-generated customer reporting. When fully implemented, IRIS claims the platform could reduce preparation time by as much as 62.5% and reduce errors by as much as 95%.

The timing of the rollout is notable and comes ahead of the UK tax sector’s peak tax season, when capacity constraints are most acute. Mid-sized businesses using IRIS Accountancy Suite are expected to save more than 1,200 hours annually once all phases are live, while smaller businesses using IRIS Elements can save at least 250 hours per year, according to company estimates.