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.
This is a warning from Blick Rothenberg, a leading audit, tax, and business advisory firm.
Ele Theochari, partner and R&D specialist at the firm, says the government’s recently announced AI Opportunities Action Plan presents both “opportunities and risks” for R&D practitioners. A growing number of providers are using AI-based tools to compile and submit R&D claims and 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 to be “wordy but lack substance,” making them vulnerable to HMRC scrutiny. He notes that some large, R&D-focused companies have already gone out of business in the past four years because of the poor quality of their work and the follow-up investigations they can’t defend.
While AI can simplify aspects of the R&D claims process, Theochari emphasizes that the role of an experienced advisor “cannot be underestimated.” Even accurate data fed into AI can cause errors and falsehoods—known as “AI biases”—that compromise the integrity of the claim. HMRC’s own attempt to rely on AI for fact-checking during compliance inquiries has similarly run into this problem.
Even better, Theochari points out that AI can be used to effectively summarize complex technical information, identify basic technologies, conduct research, and manage large amounts of data. However, he stresses that expert input is essential to ensure that any AI-generated content is authentic, relevant, and suitable for HMRC scrutiny.
