Did AI Reject Your R&D Claim? The HMRC Transparency Ruling Explained
HMRC R&D tax claim transparency AI refers to the question of how HM Revenue and Customs uses and discloses information about artificial intelligence in its R&D tax relief compliance work, following a 2025 tribunal ruling on an FOI request about AI use.
As of September 2025, HMRC stated its R&D compliance team does not use generative AI to draft taxpayer letters.
Key Takeaways
- A First-tier Tribunal ruled in August 2025 that HMRC could not maintain its refusal to confirm or deny whether it held information about AI use within its R&D Tax Credits Compliance Team, in Elsbury v Information Commissioner [2025] UKFTT 915 (GRC).
- HMRC said its R&D Tax Credits Compliance Team did not use large language models or generative AI as part of its work on R&D tax relief claims, and that generative AI was not approved for generating taxpayer letters.
- Advisers separately told the Financial Times that some individual caseworkers used AI tools without authorisation, a claim HMRC has not fully confirmed or denied.
Does HMRC Use AI to Assess R&D Tax Claims?
HMRC’s stated position is that its R&D Tax Credits Compliance Team did not use large language models or generative AI as part of its work on R&D tax relief claims. HMRC also said generative AI was not approved for generating taxpayer letters.
That statement only addresses one part of the wider question of AI use in tax decisions. The ruling did not determine whether other forms of automation were used in the wider R&D compliance process.
HMRC’s published R&D compliance approach confirms that claims go through a risk assessment process to identify those that may require a compliance check. For a claimant, that distinction matters. A human signing off an enquiry letter does not necessarily mean every part of it was assessed manually.
What Happened in the Elsbury Tribunal Case?
Thomas Elsbury, an R&D tax specialist, suspected AI involvement in HMRC’s rejection letters after spotting American spellings, em-dash punctuation and generic wording that didn’t match his clients’ claims.
He filed a Freedom of Information request in December 2023, asking HMRC to confirm whether large language models were used in its R&D Tax Credits Compliance Team.
The case went through several stages before the tribunal issued its ruling:
- December 2023: Elsbury submits his FOI request to HMRC.
- January 2024: HMRC confirms it holds relevant information but refuses disclosure under section 31(1)(d) of the Freedom of Information Act 2000, citing prejudice to tax collection.
- Mid-2024: HMRC shifts its position, refusing to even confirm or deny it holds the information, known as a “neither confirm nor deny” (NCND) stance.
- November 2024: The Information Commissioner’s Office backs HMRC’s NCND position, and Elsbury appeals.
- 2 August 2025: The First-tier Tribunal (General Regulatory Chamber) rules in Elsbury’s favour, ordering HMRC to respond within 35 working days.
Judge Alexandra Marks found HMRC’s NCND pivot “untenable,” ruling that public interest in transparency outweighed HMRC’s fraud-prevention concerns. The tribunal set a compliance deadline for disclosure of 18 September 2025.
Widely circulated claim: The tribunal ruling proved HMRC had used AI to reject R&D tax claims.
Correct position: The tribunal ruled only on HMRC’s duty to properly respond to a Freedom of Information request. It made no finding that AI had rejected any specific claim.
Source: Elsbury v Information Commissioner [2025] UKFTT 915 (GRC), First-tier Tribunal (General Regulatory Chamber).
This distinction is important when considering what the ruling means for your own claim.
What Has HMRC Disclosed About AI Use in R&D Tax Claims Since the Ruling?
HMRC subsequently responded to the tribunal order in September 2025, confirming that generative AI was not approved for use in generating taxpayer letters within its R&D Compliance Team. HMRC also said its R&D compliance work was carried out by caseworkers.
HMRC’s response addresses the specific question Elsbury asked. HMRC also disclosed that it had tested an internal R&D summariser in 2024.
The test was carried out on a small number of cases after caseworker assessment and action had already taken place, and HMRC said the tool was not used to inform compliance activity, contact customers or make decisions.
Were HMRC Caseworkers Using AI Without Authorisation?
Financial Times reporting in September 2025 cited advisers who said individual HMRC caseworkers used generative AI tools without approval in 2023.
One source said staff were disciplined; another said officers later received training on permitted use, though HMRC has not independently confirmed these specific claims.
These reports remain allegations rather than tribunal findings. The position can be separated into what is established and what remains unconfirmed:
- Established: HMRC said generative AI was not approved for generating taxpayer letters within the R&D Tax Credits Compliance Team.
- Alleged, not confirmed: Individual caseworkers used unapproved AI tools before that policy was enforced.
- Alleged, not confirmed: Some staff faced disciplinary action over unauthorised AI use.
- Unresolved: Which cases, if any, were affected by unauthorised AI-drafted enquiry letters.
Treat any claim about specific affected cases with caution until HMRC or a tribunal confirms it directly.
What Are the New R&D Compliance Rules for HMRC?
R&D compliance activity has intensified sharply since 2023, running alongside the transparency dispute. HMRC’s published R&D compliance figures for 2023–24 show the scale of the increase.
| Measure | Figure |
|---|---|
| Compliance check rate | Risen from 10% (2023) to 17% (2024) |
| Additional Information Form (AIF) | Required for R&D relief claims submitted from 8 August 2023 |
| Claim notification window | Some companies must notify HMRC within 6 months of the end of the period of account |
| Tribunal disclosure deadline | 18 September 2025 |
HMRC says the additional information requirements help it risk-assess R&D claims, process them and pay them more effectively. Claims go through a risk-assessment process to identify those that may require a compliance check.
Where a claim notification is required, failing to submit it within the statutory deadline can make the R&D claim invalid.
How to Tell If Your HMRC Letter Was Actually Generated by AI
Unusual wording, formatting, or generic objections cannot by themselves establish that an HMRC letter was generated by AI. If you have concerns, focus on whether the letter accurately addresses the evidence and information submitted with your claim, and ask HMRC to clarify the basis of its decision.
This approach avoids treating every oddly worded HMRC rejection letter as evidence of AI involvement, since human caseworkers can also write inconsistently.
Why Isn’t HMRC’s R&D Compliance Work on the Public AI Register?
The UK’s Algorithmic Transparency Recording Standard (ATRS) requires government departments and other public-sector organisations within its mandatory scope to publish information about certain algorithmic tools that significantly influence decisions or interact directly with the public.
HMRC’s public ATRS records should therefore be checked when assessing whether an R&D compliance tool has been published.
What ATRS Is Supposed to Cover
ATRS guidance states the standard applies where an algorithmic tool has significant influence on a decision-making process with public effect.
ATRS guidance allows sensitive information to be withheld or redacted where an exemption applies, including where publication could create security, privacy or intellectual-property risks. In most cases, the guidance favours publishing a record with sensitive details limited or redacted.
What Should You Do If Your R&D Claim Is Rejected or Investigated?
A rejection or compliance check does not automatically mean something has gone wrong with your claim, and it does not mean AI was involved. The stronger response focuses on evidence rather than speculation about drafting software.
- Answer every point raised, in order, rather than issuing a general rebuttal.
- Cross-reference your original submission so HMRC can see exactly what was already provided.
- Keep a full, timestamped correspondence record in case a later appeal becomes necessary.
- Escalate the matter proportionately. A routine compliance check is different from HMRC’s more serious enforcement powers, such as those used in HMRC dawn raids for tax evasion, and most R&D enquiries never approach that threshold.
If you disagree with an HMRC tax decision, you usually have 30 days from the date of the decision letter to either appeal or accept a review. The decision letter should explain the available options and the applicable procedure.
What Does This Mean for Future R&D Claims?
The Elsbury case may not be the last transparency dispute HMRC faces over AI. HMRC has disclosed that it tested an internal R&D summariser in 2024.
The test involved a small number of cases after caseworker assessment and action had already taken place, and HMRC said the tool was not used to inform compliance activity, contact customers or make decisions.
Wider adoption raises the same accountability questions highlighted by the case: what role automated systems play and how clearly that role is disclosed.
The Elsbury ruling provides an important example of how questions about HMRC’s handling of information on AI use can be challenged through the FOI process.
Conclusion
The Elsbury case gives claimants an important example of a tribunal examining HMRC’s handling of an FOI request about AI use in R&D tax compliance, while HMRC maintains that its R&D Tax Credits Compliance Team did not use generative AI as part of its work on R&D tax relief claims.
Strong technical evidence, clear correspondence records, and a factual response to compliance checks remain important for any claim. The case also highlights wider questions about transparency in HMRC’s tax administration for UK innovators in 2026.
FAQs
Does the Elsbury ruling mean HMRC used AI to reject R&D claims?
No. The tribunal made no finding that AI was used to reject any specific R&D claim. It ruled on HMRC’s handling of an FOI request about AI use, while HMRC subsequently said its R&D Tax Credits Compliance Team did not use large language models or generative AI as part of its work on R&D tax relief claims.
Does HMRC use AI to assess R&D tax claims at all?
HMRC says its R&D Tax Credits Compliance Team did not use large language models or generative AI as part of its work on R&D tax relief claims. HMRC also disclosed that it tested an internal R&D summariser in 2024, but said it was not used to inform compliance activity or make decisions.
What is the Additional Information Form, and how does it relate to this ruling?
The Additional Information Form (AIF) is required for R&D tax relief claims made from 8 August 2023. It must be submitted before or on the same day as the Company Tax Return containing the claim. The AIF requirement is separate from the Elsbury FOI case.
Can I ask HMRC directly whether AI was involved in my claim?
Yes. You can ask HMRC to explain which evidence it considered and which eligibility requirements it believes were not met. You can also refer to Elsbury v Information Commissioner [2025] UKFTT 915 (GRC) as background when raising questions about AI use and transparency.
What does HMRC R&D tax claim transparency AI mean, in simple terms?
In simple terms, it refers to questions about how HMRC uses and discloses information about AI and other automated systems in R&D tax compliance. The Elsbury tribunal case concerned HMRC’s handling of an FOI request about AI use, while HMRC has said its R&D Tax Credits Compliance Team did not use generative AI as part of its work on R&D tax relief claims.
Disclaimer: This article is for informational purposes only and does not constitute formal tax or legal advice; consult a qualified professional for your specific claims.
