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.
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