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Teksolutions-Inc Ltd (TC7456)
The taxpayer filed corporation tax returns showing trading losses and claims for research and development tax credits available for small and medium-sized enterprises (SMEs) (CTA 2009, Pt 13 ch 2). HMRC opened enquiries and found no evidence to support the claimed expenditure. It therefore issued a closure notice reducing the trading losses to nil. The taxpayer appealed.
The First-tier Tribunal was not willing to accept the taxpayer’s assertions that the expenses had been incurred. The judges found the director of the taxpayer to be a ‘deeply unsatisfactory witness who was willing to say whatever he thought would assist the … case regardless of whether it was true or not’.
The company could not provide evidence to prove that the expenditure had been incurred. Instead, the director said the work product – graphs and equations set out in a slide show - was proof it had incurred the expenditure.
The taxpayer's appeal was dismissed.
