No evidence to support claim for R&D costs

The taxpayer was a publishing company which originally published books in bound paper form. It found that increasingly customers wanted books in a digital format. As a result the taxpayer undertook research to make its books available in as searchable resources in digital form.

It claimed research and development enhanced credit on the expenditure. HMRC refused the claim. The taxpayer appealed.

The First-tier Tribunal did not accept the taxpayer’s case that its work was an ‘advance in science and technology’ as defined by the Department for Business Innovation and Skills guidelines. Indeed the taxpayer could show only that the technology used was new to the company; it had not registered any patents as a result of the project.

The taxpayer was unable to provide any evidence that the individuals concerned with the project had any expertise in software. This led the judge to conclude that while they were...