A London company recently took HMRC to the tribunal regarding a denied R&D SME Scheme tax credit claim. Here is their success story.
Having a Research and Development (R&D) tax credit claim denied can be frustrating. However, there is the option of taking HMRC to the tribunal if you feel they wrongly denied your claim. TS Partners have found a case that serves as an excellent example of how to proceed if you believe your claim has been improperly rejected and the potential outcome of this option.
Claiming R&D Tax Credits Through SME Scheme
Any company in any sector can claim R&D tax credits through the SME Scheme. However, the projects must meet the qualifying guidelines. The best way to guarantee the success of your claim is to contact the experts.
TS Partners has a team of R&D experts that will help you through every step of your tax credit claim, from identifying if your project qualifies all the way to submitting the claim to HMRC for you. We aim to resolve enquiries efficiently and offer the best possible advice to all of our clients.
The Case of Quinn (London) Ltd
In the case of Quinn (London) Ltd v HMRC [2021] TC08321, the First Tier Tribunal (FTT) declared that their R&D tax credit claim under the SME Scheme was wrongly denied.
Quinn is a construction company that works with clients under JCT Standard Building Contracts Without Quantities. These types of contracts oblige Quinn to deliver work to a suitable standard for an agreed fixed price. Because the contracts are a fixed price, HMRC denied their R&D claim on the basis that the work was subsidised in the agreed fixed price. This meant the company was losing out on a £1m claim, but they believed this was a mistake by HMRC.
The Rules Say:
HMRC indicate that tax credit relief won’t be granted to SMEs receiving any other notifiable State Aids for the same project. However, if no notifiable State Aid was received, but another form of subsidy is, the expenditure on the project must not be covered by said subsidy to qualify for tax credits.
During their contracted works, Quinn developed new technological knowledge and methods that they can use in future works. Furthermore, the company’s unique and bespoke techniques fell outside of the fixed price for the contracts and were necessary to complete the projects to a good standard. Therefore, their expenses can be claimed under the SME Scheme rule highlighted above.
The appeal was granted because the fixed price may or may not be enough to cover R&D costs, nor was any expenditure on R&D met directly by the client. Quinn was able to present enough evidence so that FTT allowed the appeal after finding that there wasn’t any clear link between the price paid by the client and the R&D costs declared by the company. Thanks to the evidence presented by Quinn to prove their expenditure wasn’t covered by the contracts nor the client, the claim was successful. In addition, Quinn proved they had never agreed to have the client pay for any R&D costs, as it was part of a larger project.
Judge Harriet Morgan declared that HMRC’s approach to this case was not only a mistake, but it could also put the whole R&D SME Tax Relief Scheme in jeopardy.
Summary
Quinn not only believed their claim was wrongly denied but could also produce a level of evidence to back up their beliefs that HMRC had made a mistake. Even though FTT decisions are not binding, the results of Quinn’s appeal is encouraging for other SMEs.
Quinn’s success is not only a great victory for the company but for SMEs all over the country. Their victory prevented an incorrect narrowing of what is considered a qualifying project. It also encourages other SMEs to appeal if they can provide sufficient evidence to prove their R&D claim was wrongly denied.
As we can see from Quinn’s case, R&D in any industry can come under scrutiny, but it also highlights that every industry can qualify for tax relief under the SME Scheme. Especially with the help of our experts at TS Partners.
Contact us for any R&D tax queries you have and let our experts help you get the most out of your claim.
Latest Posts

- 28
- Jun
On 23rd June, HM Revenue & Customs released its data concerning the ‘tax gap’ for the 2020 to 2021 tax year. The non-ministerial department said that the estimated ‘tax gap’ – defined as…

- 23
- Jun
With Thursday 16th June having been National Freelancers Day, it is fascinating to see the recently released data indicating that many firms have called upon freelance skills to an even greater extent…

- 21
- Jun
As a business owner, you will naturally want to make the most of all available resources and sources of support to better your firm’s survival and growth prospects. That’s just one reason why you …

- 20
- Jun
Farmers in England can apply for between £25,000 and £300,000 in funding to help promote their business and increase their produce’s value. The funding is available through the new £30M Farmi…

- 18
- Jun
To say that recent months have presented stern challenges for businesses would be quite the understatement – and recent research has shed greater light on precisely what keeps small-business owners …

- 15
- Jun
The Plymouth Workplace Travel Grants are a part of Plymouth City Council’s Productive Plymouth Programme to promote sustainable transport measures. The grants are funded by the Department for Tr…

- 14
- Jun
There was, unsurprisingly, further bad news for ‘UK plc’ in the latest Government figures, with the Office for National Statistics (ONS) revealing that the economy declined by a larger than antici…

- 10
- Jun
UK registered organisations can apply for a share of up to £12 million for creative, new and improved sustainable maritime projects. This funding is from The Department for Transport. Entries open: W…

- 7
- Jun
Escalating costs continue to be a matter pressing on the minds of individuals and businesses alike. However, while the former has now received some much-needed help with their energy bills from Chance…

- 1
- Jun
The Forestry Commission open their Tree Production Capital Grants, giving businesses within the sector apply for a share of £8.8 million in funding. Tree seed and sapling suppliers can apply for a sh…

- 27
- May
In partnership with UK Research & Innovation, the Department for Environment, Food & Rural Affairs has launched a second round of the Farming Innovation Programme. The programme supports colla…

- 25
- May
The UK Government’s decision to put up Corporation Tax from 19% to 25%, taking effect from next April, will cause the country to fall 16 places on the global ‘league table’ for corporate tax, fr…

- 20
- May
Marine Management Organisation Relaunch the Fisheries and Seafood Scheme The Marine Management Organisation (MMO) has relaunched the Fisheries and Seafood Scheme to safeguard the long-term sustainabil…

- 16
- May
With the latest State Opening of Parliament taking place amid considerable economic uncertainly brought on by such factors as escalating inflation, cost-of-living pressures, and the continuing …

- 16
- May
With the last year or so having seen the widespread removal of coronavirus restrictions, many small-to-medium-sized enterprises (SMEs) in the UK might have reasonably hoped that 2022 would be a…

- 9
- May
Independent shops have written to the UK’s Chancellor of the Exchequer, Rishi Sunak, expressing their openness to the notion of an Online Sales Tax (OST), as a potential solution for funding a major…

- 3
- May
While the cost-of-living crisis has long been far from an abstract concept for many people – the impacts being very much felt in their living standards – we are now starting to see many of those i…

- 3
- May
Key observers from across UK business have given a largely positive reception to the Government’s announcement that it will not put in place additional checks on goods arriving in the UK from the Eu…