Upper Tribunal refuses permission to appeal a costs order tied to insufficiently verified AI case summaries

Key takeaways

• The Upper Tribunal refused permission to appeal on all eight grounds and found no arguable error of law.
• GBP 2,043.30 of the GBP 13,068.42 order is tied to the AI case summaries; the rest rests on other unreasonable conduct.
• The negligence finding about the summaries is the First-tier Tribunal's, which the Upper Tribunal left undisturbed.
• The judgment records an ICAEW investigation only as the firm's representative's statement.

What did the Upper Tribunal decide?

Strauss Phillips & Co Ltd, a firm of accountants, asked the Upper Tribunal for permission to appeal a First-tier Tribunal (Tax Chamber) costs decision in the Gary Elden appeal against HMRC. The same judge had refused permission on the papers on 24 August 2026. After an oral hearing on 2 October 2026, the judge refused permission on all eight grounds, finding that none raised a realistic prospect of success or an arguable error of law. The decision is dated 9 October 2026.

The judge described the challenge as largely a disagreement with the First-tier Tribunal's findings of fact and evaluative conclusions. The judge added that the issues raised "do not give rise to any novel point, matter of public importance nor point of principle" and concern well-established principles on costs. Mr Elden's own substantive appeal is ongoing, because the earlier strike-out application by HMRC failed.

How much of the GBP 13,068.42 related to AI case summaries?

GBP 2,043.30 of it. The costs decision, as set out in the judgment, has two parts. The first is a wasted costs order under rule 10(1)(a) of GBP 2,043.30, for HMRC's time reviewing and responding to the skeleton argument's case summaries. The judgment lists three time entries on 18 and 19 September 2025 that make up that figure.

The second is a summary assessment under rule 10(1)(b) for unreasonable conduct of the proceedings: 80 per cent of GBP 13,781.40, which the judgment gives as GBP 11,025.12. That part rests on other conduct, such as an untrue assertion that documents had been provided, shifting positions on a witness statement and repeated missed deadlines. Added together, the two figures equal the total of GBP 13,068.42. The First-tier Tribunal made the order against the firm only, not against Mr Elden.

What did the tribunals say about the AI case summaries?

The findings come from the First-tier Tribunal's strike-out decision, Elden v HMRC [2026] UKFTT 41 (TC), which the Upper Tribunal quotes. The skeleton argument contained summaries of five cases. The tribunal found that "the case summaries were produced using AI and that they have not been verified for accuracy with sufficient care". It cited Ayinde for the point that "there are serious implications for the administration of justice and public confidence in the justice system if artificial intelligence is misused."

The strike-out decision records that the firm first neither confirmed nor denied using AI, and later confirmed AI had been used "to aid conciseness and consistency". It also records that the summaries of two cases, Hok and Atlantic, were withdrawn. In the costs decision the judge applied the Ridehalgh test and found the behaviour met the test for negligence. The Upper Tribunal found that finding open to the First-tier Tribunal and noted that the firm accepted, in part, that AI had been used.

What does it mean for accountants, tax advisers and other representatives?

For regulated advisers, the practical point is who carries the checking duty. The First-tier Tribunal described a lack of sufficient care as amounting to "professional incompetence on the part of any regulated individual or firm involved in the production of the skeleton argument". The judgment records the taxpayer relying on his advisers, and the costs order fell on the firm alone.

The judgment also records the firm's representative saying that the firm "is now the subject of a regulatory investigation by ICAEW arising directly from these proceedings". The judge treated whether any ICAEW proceedings exist, and their substance, as outside the Upper Tribunal's remit. He also said the costs decision "is not a finding for the purpose of other proceedings whether they be disciplinary or otherwise". We read that as a limit on what the ruling itself decides, not a forecast of any outcome.

What are the key dates?

What should representatives do now?

The judgment states no requirement on this. These are the desk's suggestions.

• Open and read each authority cited in a skeleton argument or witness bundle, whoever drafted it, before filing.
• Keep a short record of who verified each citation and when, so you can answer a tribunal's question on whether AI was used.
• If a tribunal asks directly whether AI was used, answer plainly. The strike-out decision treated declining to confirm or deny as a failure to co-operate.
• Check your supervision arrangements, since the order here fell on the firm and not on the client.

What we did not verify

What we opened: the full Upper Tribunal decision notice on the National Archives case law site, on 25 October 2026.

What we did not open: the First-tier Tribunal strike-out decision Elden v HMRC [2026] UKFTT 41 (TC), which we rely on only through the Upper Tribunal's quotations. The costs decision itself is unpublished according to the judgment, so we did not see it. We did not open Ayinde, Hok, Atlantic or the other cases mentioned, any ICAEW document, or HMRC's statement of costs. The judgment's own figures vary slightly in places (paragraph 36 gives GBP 2,040.30 where FTT costs decision [31], quoted at UT [27], and UT [63] give GBP 2,043.30), and we use the latter.

What we refuse to claim: that the Upper Tribunal itself found the AI use negligent, that the ruling sets a general rule on AI in tribunals, that any ICAEW outcome follows, or anything about the identity dispute at the hearing, which the judge set aside as irrelevant.

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