Companies that rely heavily on artificial intelligence (AI) to prepare their Research and Development (R&D) tax claims could find their claims rejected by HMRC if the process lacks human oversight.
That is the warning from Blick Rothenberg, a leading audit, tax, and business advisory firm.
Ele Theochari, a Partner and R&D specialist at the firm, says the government’s recently announced AI Opportunities Action Plan offers both “opportunities and risk” to R&D claimants. A growing number of providers use AI-based tools to compile and submit R&D claims as well as additional information forms, sometimes falsely claiming they enjoy special privileges with HMRC.
Theochari highlights concerns about the quality of AI-driven R&D submissions, warning that many appear “wordy but lack substance,” making them vulnerable to HMRC scrutiny. She notes that some large, volume-focused R&D companies have already gone out of business over the past four years due to the poor quality of their work and follow-up investigations they could not defend.
Although AI can streamline aspects of the R&D claims process, Theochari stresses that the role of a knowledgeable adviser “cannot be underestimated.” Even accurate data fed into AI can result in mistakes and falsehoods—known as “AI hallucinations”—that compromise the integrity of a claim. HMRC’s own attempt to rely on AI for fact-checking during compliance queries has similarly encountered this problem.
On a more positive note, Theochari points out that AI can be harnessed to effectively summarise complex technical information, identify baseline technologies, conduct research, and manage large calculations. However, she emphasises that expert input is essential to ensure any AI-generated content is factual, relevant, and ready for HMRC’s scrutiny.
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Businesses using AI to file R&D tax claims risk HMRC rejection