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As AI advances, there is a growing number of people who might be inclined to utilise it for a wider range of tasks.
It is not uncommon for people to use AI in the place of professionals, trusting the advice that it generates.
If your clients are leaning towards using AI to support their R&D tax relief claims, then it is worth them understanding the risks that this introduces.
Can AI be used in R&D tax relief claims?
The use of AI depends on the type of AI that one is seeking to use.
There are bespoke systems designed to make tedious tasks more straightforward and these are often used by professionals like accountants.
However, there is not currently any such system that would allow for the compilation of R&D tax relief claims.
This means that when a client is considering using AI, they are likely to be reaching for generic, Large Language Models (LLMs) like ChatGPT.
These systems present issues when being used in R&D tax relief claims that need to be considered before they are used.
Is it dangerous to use AI for R&D tax relief claims?
By their very definition, R&D tax relief claims centre on developing something innovative.
This means that the businesses working on these developments need to be careful with how the data is managed.
LLMs are not known for being secure and any information input may be used to train future iterations of the software.
In some instances, it is also possible to reverse engineer prompts to determine what other users have entered into the LLM.
This could lead to instances where competitors learn about the innovative work that is being done in the sector and could lead to advances being achieved by rival companies.
Additionally, there may be a temptation to use AI for the technical narrative, as it can be challenging to represent the project in a way that HMRC will value.
However, this will also result in sensitive data being entered into the LLM, thus continuing to pose a data risk.
If sensitive data is not used, the technical narrative will be too generic to be of use to HMRC and will likely be contested in the event of an enquiry.
At this point, the only way to salvage the claim would be to rewrite the technical narrative to better centre the innovation sought.
As this is inevitable, whatever time is saved by using the LLM in the first place will ultimately be lost.
How should innovative businesses use AI in R&D tax relief claims?
There is currently no safe or effective way to use an LLM or generic AI to create an R&D tax relief claim.
Instead, it is better to seek the advice of a professional to ensure that R&D tax relief claims are filed in a way that is compliant with HMRC and can be defended in the event of an enquiry.
As R&D tax consultants, we work to support accountants and innovative businesses to handle R&D tax relief claims.
Don’t rely on AI. Speak to our team today.
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