In this Blog our head of Tax Disputes, Andy Lynch, looks at the dangers of using AI in tax tribunal claims.
The increasing us of AI in tax claims
Artificial intelligence tools are increasingly used by taxpayers and directors looking for quick answers during HMRC disputes. AI tax advice can appear attractive when time is short and costs are a concern. However, a recent decision of the First-tier Tribunal (Tax Chamber) illustrates a growing risk. Where reliance on AI-generated material leads to poor submissions and procedural failures, the damage can extend far beyond the immediate point being argued.
For anyone facing an HMRC investigation or appeal, the lesson is not about technology itself. It is about timing, credibility, and the value of proper early advice.
Why are more taxpayers relying on AI tax advice during disputes?
AI tools promise speed, accessibility, and apparent certainty. For directors and business owners under pressure, they can seem like a practical way to understand complex tax issues without immediate professional input.
- In the early stages of a dispute, it is common for people to look for reassurance, draft responses themselves, or test arguments before committing to formal advice.
- AI tax advice is often used at this point, particularly where the dispute feels manageable or technical rather than high risk.
The problem is that tax disputes rarely remain confined to narrow technical questions.
What did the tribunal criticise in the recent AI-assisted tax appeal?
In the case before the tribunal, AI-generated material was used to support submissions that contained inaccurate authorities, misunderstood principles, and repeated procedural defaults. The tribunal was critical of the standard of the submissions and the failure to comply properly with directions.
- Although the appeal itself was not struck out, the tribunal made clear that this kind of conduct undermines the administration of justice.
- The criticism was not aimed at innovation, but at the absence of proper judgment, verification, and procedural discipline.
The case stands as a warning that poorly framed submissions can attract judicial concern even where a party is ultimately allowed to continue.
How can poor submissions damage credibility with HMRC and the tribunal?
Credibility is established early in tax disputes. HMRC officers and tribunal judges form views quickly about whether a case is being handled responsibly.
- Inaccurate citations, inconsistent arguments, or missed deadlines can signal a lack of seriousness or understanding.
- Once that impression is formed, it can influence how correspondence is treated, how much latitude is given, and how robustly HMRC pursues penalties or escalation.
Relying on untested AI tax advice increases the risk of early missteps that are difficult to reverse later.
Why is early specialist advice critical in tax disputes?
Early advice is not just about drafting better documents. It is about framing the dispute correctly from the outset.
This is where our expert tax disputes team comes in.
Specialists in our team can quickly assess risk, manage disclosure, control tone, and decide when to engage substantively with HMRC and when to hold back. We can also identify when a matter is likely to escalate into penalties, personal liability, or insolvency-related consequences.
By contrast, attempting to “retrofit” professional advice after procedural problems have arisen often limits the available options.
What should taxpayers and directors do before engaging with HMRC or the tribunal?
The safest approach is to treat the early stages of a tax dispute as strategically important.
- Before responding in detail, filing submissions, or appealing decisions, taxpayers and directors should seek advice that is specific to their circumstances and grounded in current practice.
- AI tax advice may help with background understanding, but it should never replace professional judgment where personal and financial exposure is at stake.
Early, informed decisions reduce the risk of escalation, preserve credibility, and place the dispute on a footing that is far easier to manage.
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