A publishing company's Research & Development (R&D) claim was rejected by the First Tier Tribunal (FTT). The company was unable to demonstrate that its projects made any advance in science or technology, nor could it evidence how the expenditure claimed was directly related to the projects that it did carry out.


In Flame Tree Publishing Limited v HMRC [2024] TC09149, a Research and Development (R&D) claim was made in respect of several projects to make books in the company's digital archive available in the marketplace as curated and searchable resources.

HMRC enquired into the company's claim and rejected it on the basis that there was no R&D being undertaken.

Upon appeal to the FTT, the company:

  • Argued that the BEIS Guidelines were open to a degree of interpretation. The FTT disagreed. The case of Hadee v HMRC held that a narrow approach was required.
  • Claimed its key staff members were competent professionals but it was clear they only had 'some knowledge' of IT and computing. They lacked detailed and up-to-date knowledge in software, programming and computing.
  • Acknowledged that the 'Ogg technology' utilised in the company's solution may well have been used in the same manner by previous users. Therefore, whilst it was new to the company, it was not a novel solution in the wider context.
  • Provided no evidential basis for any of the employee costs and other expenditures claimed on the same basis and was also therefore not credible.

The FTT noted that the majority of work had been carried out by a third-party company but the claim was made based on in-house direct R&D under s.1052 CTA 2009. A claim for contracted out R&D can be made under s.1053 but this was not referenced.

The R&D claim was denied for the period in question giving rise to an increase in Corporation Tax of £50,662.

The FTT did not comment on the behaviour of the taxpayer. HMRC's enquiries may have already established there was no careless or deliberate action by the company which had acted in good faith.


Many of the problems with R&D claims arise from the lack of a definition of a competent professional. Instead, the BEIS Guidelines say it must take its natural meaning that 'goes beyond having an intelligent interest in the field'. It is all too easy for company officers and employees to believe they meet that test if they are not well advised at the outset. To make a real advance there surely needs to be a level of expertise involved that goes beyond anyone's interpretation of competence.

Useful guides on this topic

Research & Development Tax Reliefs: At a glance 
What is Research and Development (R&D) relief? How to claim R&D relief? How does small company R&D relief work? Can individuals claim R&D relief?

Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?

R&D: SME Tax Credit Scheme
What Research & Development (R&D) schemes are available to companies undertaking R&D? How to make an R&D claim?

R&D: Staff costs, subcontractors & reimbursed expenses
What staff costs qualify for relief? Who are externally provided workers? Can you claim sub-contractor costs? Do reimbursed employee costs qualify?

External links

Flame Tree Publishing Limited v HMRC [2024] TC09149