This week's opinion: 2 July 2020

Afew months ago (27 February 2020, page 5) I wrote about the problems with research and development (R&D) claims raised by the National Audit Office in its report about tax reliefs. 

I was reminded of this when reading a recent First-tier Tribunal decision, AHK Recruitment Ltd (TC7718), relating to an unsuccessful R&D claim. I know nothing about the background and can rely only on the published report, but it seems to me that this is a good illustration of some of the problems that can arise with these claims. Nobody from the company appeared as a witness before the tribunal to give evidence about the project. Although the tribunal did not doubt their honesty, the explanations by the R&D specialist who alerted the company to the possibility of the claim – they were not the company’s usual advisers – failed to give any clear indication about the basis on which the claim was made. Nor was anybody able to produce an analysis of the costs included within the claim.

These are not easy questions and there will be different views, but I believe the issue merits serious discussion.