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Module 5: Research and review

Catching a hallucinated citation

25 minutes. Last checked 8 November 2026.

Lesson 2 of 4 in this module

Everything in this lesson is fictional: the practice (Harlow & Penn Accountants), its clients and the AI answers, which were written for this course to be wrong. Do not paste real client data to follow along.

What you will do

Check every reference in an AI tool's tax answer against the text of the source, and catch the references that do not exist or say something else.

When to use it

An AI answer cites "section 323A" or "EIM21899", and the precision makes it look checked. It is not. Lesson 0.2 introduced the PCRT guidance on AI tools. AI tools can "hallucinate": they present wrong or nonsensical information as fact. The guidance suggests confirming that any case law or legislation the tool cites actually exists, and it names Harber v HMRC [2023] UKFTT 1007 (TC).

A cited reference fails in one of two ways. It does not exist at all. Or it exists, and says something different from what the answer claims. The second is harder to catch, because the first look-up succeeds. This lesson replaces reading an answer, seeing a section number and moving on. You look up every reference yourself, paste what the source says, and let the tool do the part it handles best here: lining up two pieces of text side by side. You still read both texts yourself.

The next time an answer cites anything, whether it came from your tool, a colleague or a client:

  1. Copy the answer as it is. Do not ask the tool to fix it first.
  2. Look up every reference yourself: legislation.gov.uk for an Act, gov.uk for an HMRC manual or guidance page. Copy the passage it points to. Where you find nothing, write the reference and "not found", with the date you looked.
  3. If the answer holds client details, anonymise it so the client cannot be identified, or use a tool not made for public use. Lesson 0.2 shows both routes.
  4. Paste the prompt below with the answer and your source text under it.
  5. Read every "Matches" and "Partly matches" row against the source yourself, and fix the answer from the source, never from the tool's memory.

The prompt

Prompt parts:

  • Role
  • Context
  • Task
  • Inputs
  • Constraints
  • Format
  • Questions first

  1. Part 1. Role: You are helping a UK accountant check the references in a piece of tax writing before anyone relies on it.

  2. Part 2. Context: The writing may have come from an AI tool. Such tools sometimes cite a section, manual paragraph or case that does not exist, or that says something different. Under the writing I have pasted the text of each source I looked up myself, or noted that I could not find it.

  3. Part 3. Task: Check every reference in the writing against the source text I pasted.

  4. Part 4. Inputs: The writing, then the source text for each reference, pasted below.

  5. Part 5. Constraints: Use only the source text I pasted, never what you know about these references. One row for each claim the writing makes about a reference. Quote the source word for word. A claim matches only if the pasted text says what the writing claims. Where I noted a reference as not found, mark it Not found. Do not rewrite the writing and do not give advice.

  6. Part 6. Format: A table with the columns Reference, What the writing says it says, What the source text says and Result, where Result is Matches, Partly matches, Does not match or Not found. Under the table, one line for each Partly matches row saying what differs. Then a list headed "Sentences to cut or fix", quoting each sentence of the writing that relies on a claim marked Partly matches, Does not match or Not found.

  7. Part 7. Questions first: If the writing cites a reference I have pasted no source text for, and have not marked as not found, ask me for it before you start.

[paste the writing, then the source text for each reference]

Why this prompt works

The Inputs carry the weight: because you paste the source text yourself, the tool compares two pieces of text in front of it instead of recalling a reference it may have invented, and the Constraints stop it reaching past what you pasted.

Sample input

A director asked an AI chat tool whether her company could give Christmas hampers tax-free, and forwarded its answer. The answer is wrong, and was written that way for this lesson. Under it are the passages a member of staff looked up. Paste all of it in place of the paste line.

Sample input

FICTIONAL SAMPLE FOR COURSE PRACTICE. Not a real client.
Harlow & Penn Accountants, anonymised before pasting

THE WRITING (an AI answer, WRONG, kept for this lesson to be checked. Do not rely on it.)
Question: Our company is run by its two directors, a married couple, and has two staff. Can the company give each of the four of us a £75 Christmas hamper tax-free?
Answer: Yes. Under section 323A of the Income Tax (Earnings and Pensions) Act 2003, a trivial benefit is exempt from tax if it costs £100 or less per person, is not cash, and is not a reward for work. HMRC's Employment Income Manual at EIM21899 confirms that directors of close companies can receive any number of trivial benefits in a year. So a £75 hamper for each of you is tax-free.

SOURCE TEXT
Section 323A, Income Tax (Earnings and Pensions) Act 2003, from legislation.gov.uk:
(3) Condition A is that the benefit is not cash or a cash voucher within the meaning of section 75.
(4) Condition B is that the benefit cost of the benefit does not exceed £50.
(9) Condition D is that the benefit is not provided in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services.

EIM21899: not found. The gov.uk address for this manual page returned "page not found".

Example output

Example output. Yours will differ in wording.

(Fictional, written for this course.)

ReferenceWhat the writing says it saysWhat the source text saysResult
Section 323A, ITEPA 2003A trivial benefit is exempt if it costs £100 or less per person"Condition B is that the benefit cost of the benefit does not exceed £50."Does not match
Section 323A, ITEPA 2003The benefit must not be cash"Condition A is that the benefit is not cash or a cash voucher within the meaning of section 75."Matches
Section 323A, ITEPA 2003The benefit must not be a reward for work"Condition D is that the benefit is not provided in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services."Partly matches
EIM21899Directors of close companies can receive any number of trivial benefits in a yearYou noted that this page was not foundNot found

Partly matches, the "reward for work" row: Condition D rules out a benefit given "in recognition of particular services", done or expected, which is narrower than any reward for work.

Sentences to cut or fix

  • "Under section 323A of the Income Tax (Earnings and Pensions) Act 2003, a trivial benefit is exempt from tax if it costs £100 or less per person, is not cash, and is not a reward for work."
  • "HMRC's Employment Income Manual at EIM21899 confirms that directors of close companies can receive any number of trivial benefits in a year."
  • "So a £75 hamper for each of you is tax-free."

Here is the wrong answer beside the right rule. The right column quotes the sources as they read on the Last checked date above.

The wrong answer saidWhat the sources say
Section 323A sets a limit of £100 a personThe section exists, but says £50: "Condition B is that the benefit cost of the benefit does not exceed £50."
EIM21899 says close-company directors have no annual limitThere is no EIM21899: gov.uk returned "page not found" for it on the Last checked date above. The real manual page, EIM21864, says the exemption for a director of a close company "is capped at a total cost of £300 in the tax year (see EIM21869)."
A £75 hamper is tax-freeWrong. gov.uk lists "it cost you £50 or less to provide" as a condition, and says "You have to pay tax on any benefits that do not meet all these criteria."

So the honest reply to the director is that a £75 hamper is not a trivial benefit, for her or her staff. A cheaper hamper could be, within the conditions and the £300 cap for each director.

What to check

  • Every "Matches" and "Partly matches" row, yourself. Read the quoted source line against the claim. The tool is comparing text, but it can still call a near miss a match. The "reward for work" row is a near miss: the writing's words are looser than Condition D.
  • Every reference made it into the table. Count the references in the writing and the rows in the table. A skipped reference is an unchecked one.
  • "Not found" means unsupported. Search once more by the words of the claim, as you would for a mistyped reference. If you still find nothing, drop the point. Here the search found EIM21864, which says the opposite.
  • A real reference with a wrong claim. Section 323A exists, so a quick look-up "confirms" it. Only the text of subsection (4) shows the £100 is wrong.
  • The conclusion, not just the citations. Once one reference fails, the answer built on it fails too. Rewrite the reply from the sources, then check it the same way.

Variations

  1. A client's AI answer. Use the same prompt on what the client forwarded, then reply from the sources. Lesson 2.6 covers the reply itself.
  2. A case citation. Search for the decision yourself by its name and citation, and paste the paragraph the answer relies on. If you cannot find the case, write "not found" and do not use the point.
  3. Prevent it next time. In your research prompts, have the tool mark every section or paragraph number "(unverified, look up)", as lesson 5.1 does. You then open each one and check it says what the rule claims.

Try it

About 10 minutes. A new client sent an AI answer about registering for Self Assessment. One of its claims cites only "HMRC guidance", with no page named, so nobody can look it up. Write the Questions first part so the tool stops and asks about a reference like that, as well as about one with no source text.

Fictional answer and source text to use:

Sample input

FICTIONAL SAMPLE FOR COURSE PRACTICE. Not a real client.
Harlow & Penn Accountants, anonymised before pasting

THE WRITING (an AI answer, WRONG, kept for this lesson to be checked. Do not rely on it.)
Question: I started as a self-employed gardener in May 2025. When do I have to register?
Answer: According to HMRC's "Check how to register for Self Assessment" page, you must register by 31 January 2027, the same day as the deadline for your 2025-26 online return. HMRC guidance also says there is no penalty for registering late as long as the return is filed on time.

SOURCE TEXT
gov.uk, "Check how to register for Self Assessment":
You must tell HM Revenue and Customs (HMRC) by 5 October 2026 if you need to complete a tax return for the previous tax year and you have either:
not sent a tax return before
registered before but did not need to send a tax return for the tax year 2024 to 2025
The previous tax year started on 6 April 2025 and ended on 5 April 2026.
If you tell HMRC after 5 October 2026, you could get a penalty.

Prompt parts:

  • Role
  • Context
  • Task
  • Inputs
  • Constraints
  • Format
  • Questions first

  1. Part 1. Role: You are helping a UK accountant check the references in a piece of tax writing before anyone relies on it.

  2. Part 2. Context: The writing may have come from an AI tool. Such tools sometimes cite a section, manual paragraph or case that does not exist, or that says something different. Under the writing I have pasted the text of each source I looked up myself, or noted that I could not find it.

  3. Part 3. Task: Check every reference in the writing against the source text I pasted.

  4. Part 4. Inputs: The writing, then the source text for each reference, pasted below.

  5. Part 5. Constraints: Use only the source text I pasted, never what you know about these references. One row for each claim the writing makes about a reference. Quote the source word for word. A claim matches only if the pasted text says what the writing claims. Where I noted a reference as not found, mark it Not found. Do not rewrite the writing and do not give advice.

  6. Part 6. Format: A table with the columns Reference, What the writing says it says, What the source text says and Result, where Result is Matches, Partly matches, Does not match or Not found. Under the table, one line for each Partly matches row saying what differs. Then a list headed "Sentences to cut or fix", quoting each sentence of the writing that relies on a claim marked Partly matches, Does not match or Not found.

  7. Part 7. Questions first: [write the Questions first part]

[paste the writing, then the source text for each reference]

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