Saeid Jamali had no doubt that 2026 was the year his AI start-up was going to take off.
After three years of development, trials and fundraising rounds, he was confident investors would back his plan to launch into the market and provide him with £500,000 of fresh funding.
However, his carefully laid plan swiftly unravelled in a matter of months after a tax credit of around £95,000 from HMRC, which he applied for in January, was delayed.
Without the money to bridge the gap between the start of the year and the next round of investor fundraising, the 33-year-old had no choice but to scale back his operation.
Six months on, the start-up has lost “momentum”, in his words – something which he knew would dampen interest from investors. He has been forced to borrow money from family members and the ordeal has left him “emotionally broken”.
He said: “I feel like it’s a checkmate. I can’t raise funding because the commercial momentum is lost and I can’t get the £95,000 because HMRC hasn’t responded.”
Mr Jamali said he was aware that launching a start-up would never be straightforward but thought he could handle any risks. He added: “Unfortunately, what I didn’t account for was a risk from the Government.”
Labour has publicly pushed for Britain to become an AI powerhouse. Rachel Reeves, the Chancellor, said earlier this month that AI adoption was one of the key ways she planned to grow the economy.
Yet the reality for Mr Jamali is that by holding up his payment, HMRC has stymied his AI start-up’s ability to get off the ground.
In previous years, he had faced no issues with claiming research and development (R&D) tax relief, which exists to help companies that work on innovative projects in science and technology. Eligible businesses can apply for these tax credits to offset certain costs, such as wages and training.
Jack Williams, of accountancy firm HaysMac, said: “The R&D credit has always been a valuable lifeline, particularly for technology start-ups. It has become less generous in recent years but it is still vital for businesses to extend their runway between fundraising rounds.”
In January, Mr Jamali made an R&D claim of £95,000 for 2025 and expected that the payment would be released within weeks. HMRC says that the “vast majority” of these claims are processed within 40 days.
By April, he had still not received the money.
Saeid Jamali made the R&D claim in January but his case is still not resolved. HMRC blames ’workload pressures’ – Paul Cooper
He contacted the tax office asking for an update. In response, HMRC told him that his claim required “additional security checks”.
Danielle Ford, of HaysMac, said: “In many cases, something within the system is flagged – prompting additional security checks – but what triggers those flags is not always transparent.
“Unfortunately, Mr Jamali’s experience is not an isolated case – we have seen similar issues affecting others.”
Two months later, Mr Jamali is still waiting for his claim to be processed.
In June, an HMRC complaint investigator admitted that there had been an “ongoing period of unreasonable delay” in processing his claim, adding that the tax office had not provided “sufficient updates”. The start-up founder was also offered £50 in redress.
As well as the uncertainty the delay has created for his start-up, Mr Jamali is also grappling with the impact it has had on his own finances. Unable to pay himself a wage since March, he has been forced to borrow money from family members.
He said: “Financial problems you will recover from, but I have never been so stressed or emotionally broken in my life.
“I spent the best years of my life on this project, years that I’ll never get back. I didn’t party, I didn’t sleep properly. I just worked and worked and pushed the company through.”
Last week, HMRC admitted in a letter to Mr Jamali that the delay in processing his payment was “due to workload pressures” in the team tasked with handling R&D claims.
Ms Ford said: “At a time when the Government is seeking to encourage economic growth, these delays are unhelpful and ultimately create uncertainty for new businesses.”
HMRC said that all R&D claims are screened and it exceeds its customer service target of processing 85pc of R&D tax credit claims within 40 days.
Sources said that the tax authority had expanded its “compliance activity” in relation to these payments in recent years, claiming that the tax relief had previously been subject to “high levels of error and fraud”.
A spokesman for HMRC said: “We’ve spoken to Mr Jamali to apologise and confirm that we’re progressing his case as a priority so we can resolve it as soon as possible.”
