Proof lacking as alcohol wholesaler loses R&D claim

In Beer Express Ltd v HMRC [2026] TC09873, the First Tier Tribunal (FTT) found that project expenditure did not qualify for Research & Development (R&D) relief in the absence of evidence from a competent professional. The FTT placed no reliance on vague and loosely termed reports prepared by an R&D advisory firm that could not be reached when the claims were challenged.

beer warehouse

Beer Express Ltd was involved in the wholesale of wine, beer, spirits and other alcoholic beverages.

  • During the two years to 30 June 2020 and 30 June 2021, the company undertook four projects:
    1. Build a demand forecasting solution to optimise processes, reduce picking time and minimise over- and under-stocking. 
    2. Develop a new and uniquely flavoured beer.
    3. Remarket and diversify product offerings.
    4. Develop a B2B website for online orders, integrating operational software and connecting to supplier systems for stock ordering.
  • The taxpayer did not initially claim any Research & Development (R&D) relief on the project costs. They were later approached by a firm, RDT Active, purportedly specialising in R&D advice that suggested the work could qualify for R&D tax incentives.
    • After making enquiries about the firm, the taxpayer appointed them to prepare the reports and claims.
  • On 18 November 2021, an R&D claim was made by way of an amendment to the taxpayer's Corporation Tax (CT) return for the year ended 30 June 2020.
    • On 8 May 2022, a further claim was made as an amendment to the 30 June 2021 return.
    • Tax refunds were issued to the R&D advisory firm. It deducted fees and passed the remainder to the taxpayer.
  • On 26 October 2022, HMRC opened compliance checks into both CT returns.
    • On 15 March 2023, HMRC sent a pre-decision letter stating that they did not consider the projects met the Business, Energy, Innovation and Skills (BEIS) guideline requirements for R&D expenditure.
  • On 18 April 2023, the taxpayer disagreed and provided further evidence.
  • On 8 June 2023, HMRC issued closure notices and disallowed both R&D claims.
    • The taxpayer attempted to contact the R&D advisory firm, but the firm seemed to have disappeared.
    • The taxpayer appealed, and HMRC issued a View of the Matter letter on 22 December 2023 confirming their decision.
    • The taxpayer requested an independent review and, on 12 September 2024, HMRC upheld the closure notices.
  • On 26 September 2024, the taxpayer Appealed to the First Tier Tribunal (FTT).

The FTT found that:

  • The project expenditure did not qualify as R&D expenditure under the BEIS guidelines.
    • For all the projects, there was a lack of evidence from a competent professional regarding which existing technologies were available and why they were not suitable.
      • In part, the BEIS guidelines require an advance to go beyond what is readily deducible from publicly available knowledge or capability by a competent professional working in the field.
      • The FTT found the contents of the reports prepared by the R&D advisory firm to be vague and loosely termed. The tribunal held that no weight could be attached to them without supporting evidence from a competent professional.
      • The owner and founder of the company acted as the sole witness for the taxpayer. Because of their lack of in-depth knowledge of the projects, they did not meet the definition of a 'competent professional'.
      • The person who may have had the necessary in-depth knowledge and involvement in the project had retired. It appears that the R&D advisory firm had not spoken to them when preparing the claim.
    • The taxpayer had not and was not able to provide evidence of a plan or detailed explanations that identified:
      • Uncertainties in each project.
      • The way in which the projects were designed to resolve those uncertainties.
      • Why the uncertainties could not be readily resolved by a competent professional in the field.

The appeal was dismissed.

Editor's comment

This case provides a cautionary tale about the use of firms claiming to be specialists in R&D work. Robust due diligence is needed to ensure that a firm is adequately qualified. Engagement terms should provide incentives for the firm to defend the claim if HMRC reject or query it.

It also demonstrates that a 'competent professional' is key to being able to provide the level of evidence needed to justify a claim.

Useful guides on this topic

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 Zone: Do I have a valid R&D Claim?
Do I have a valid R&D Claim? What conditions do I need to meet? What form of relief can I claim?

R&D: Is software development a qualifying R&D activity?
Is software development a qualifying activity for Research & Development (R&D) relief? What determines when software development qualifies as an R&D activity?

How to appeal an HMRC decision
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External link

Beer Express Ltd v HMRC [2026] TC09873