After a slight delay, HMRC has finally relented to the tribunal ruling to declare whether they use AI to assess R&D tax relief claims and to what extent this might be happening.
The results are troubling as they indicate a culture of dishonesty that might explain HMRC’s reticence to disclose its AI use.
Have HMRC been using AI to reject R&D tax relief claims?
Officially, HMRC have not been using generative AI as part of work on R&D tax relief claims.
However, there have been reports that individual caseworkers may have been using AI on the sly and this raises some grave concerns about the integrity of the R&D tax relief process.
While the most obvious response to this unscrupulous behaviour is to question the validity of any decisions made by HMRC recently, there are grave concerns that confidentiality may have been breached.
As the disclosure around the unauthorised AI use came not from HMRC but from whistle-blowers, there is currently limited information on the type of AI use that was conducted.
It is possible that highly sensitive information may have been fed into unsecure Large Language Models (LLMs) like ChatGPT, which are notorious for using prompts and data to further train the AI model.
It has even been possible to reverse engineer inputted data through specific prompting and this could constitute a major breach in security.
What will this mean for the future of R&D tax relief claims?
Frustratingly, we are not in much of a better position than we were prior to this revelation.
It has long been suspected that some AI use was influencing R&D tax relief claims, but the scope of the problem is still undefined.
While HMRC has reiterated that its official policy cautions against the use of AI, the fact that it did not voluntarily disclose the instances of AI misuse sets a troubling precedent.
If the internal review processes are robust enough to discipline agents that incorrectly use AI, then why have those processes not been revealed to the public?
Trust in how HMRC are managing R&D tax relief claims is dwindling at a time when R&D tax consultants are endeavouring to improve the overall quality of claims.
That businesses, accountants and R&D tax consultants are being held to a higher standard than HMRC is highly problematic and will need to be addressed to restore broken confidence in an otherwise excellent system.
We expect better from HMRC and sincerely hope that this ongoing scandal does not dissuade innovative businesses from seeking R&D tax reliefs.
To combat this, we will continue providing fully eligible, maximised claims for companies that have sought a genuine advance in the field.
You can trust us to manage data securely and safely and provide human-written R&D tax relief claims.
Should an R&D tax relief claim be queried, either by a human or AI, we will defend the claim to ensure that innovative businesses still get the funds they deserve.
