Lee Sharpe looks at how the courts have treated some recent research and development claims that HMRC has rejected.
For broadly the last couple of years, HMRC has been ‘cracking down’ on claims for tax relief on qualifying research and development (R&D) by SMEs, involving a concerted effort to challenge a much greater proportion of claims than previously, as a targeted campaign of compliance checks or enquiries. These efforts have raised questions of competence – on both sides.
To qualify as R&D for a tax claim, the requirements may be rudely summarised as follows: The company must be able to demonstrate it has qualifying costs in a project that attempts to secure an advance in a field of science or technology (not just an advance in the company’s own knowledge, and that is also relevant to the company’s trade or intended trade), through the resolution of scientific or technological
