R&D tax relief •12 min read

BW Interiors Ltd v HMRC

MJ

Matthew Jones ACA CTA

Last reviewed September 2026 · Editorial standards

Tribunal
First-tier Tribunal (Tax Chamber)
Decided
31 March 2026
Judge
Judge Jennifer Dean

The company did what HMRC’s letter told it to do, and lost its appeal for doing it. HMRC’s pre-closure letter said the company could send its appeal to an independent tribunal; the company asked HMRC to confirm that, HMRC confirmed it, and the company appealed straight to the tribunal. The appeal was struck out. Section 49D of the Taxes Management Act 1970 lets a company notify an appeal to the tribunal only once it has appealed to HMRC. As the tribunal put it, HMRC’s care and management powers do not allow it to override a statutory requirement. Nothing about the R&D claim was decided.

What was at issue

BW Interiors Limited had claimed SME R&D tax relief. HMRC enquired into the claim and issued a closure notice dated 9 July 2025 (paragraph 14). What that notice decided is not on the face of the decision, which records a complaint about HMRC’s handling of “the Appellant’s 2021 R&D claim” (paragraph 12) but gives no accounting period, no figures, and no account of the technical dispute. None of that was before the tribunal.

What was before it was HMRC’s application of 11 December 2025 to strike the appeal out for want of jurisdiction, under Rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The company had given written notice of appeal only to the tribunal and never to HMRC, so the statutory route had never opened (paragraphs 1 and 2).

The single question was therefore one of law: can a direct tax appeal reach the tribunal when it has not first been made to HMRC?

How the dispute got to a hearing

The chronology is the substance of this case.

On 29 April 2025 HMRC issued a “pre-closure explanation” letter. It told the company that if it disagreed with the closure notice it could “Ask for my decision to be reviewed by an HMRC officer not previously involved in the matter” or “Send your appeal to an independent tribunal” (paragraph 9). It added: “If you opt for a review, you can still send your appeal to the tribunal after the review has finished” (paragraph 9).

The company noticed that this did not match the guidance on Form T240 and asked HMRC to confirm the position. The decision dates that query twice and differently — 2 May 2025 in the tribunal’s findings at paragraph 10, 6 May 2025 in HMRC’s submissions at paragraph 18. Either way, HMRC responded on 7 May 2025 confirming what its letter had said (paragraphs 11 and 19).

The closure notice followed on 9 July 2025. On 21 July 2025 HMRC answered the company’s complaint; only an extract was put before the tribunal, recording that the enquiry had been “fully reviewed by a Tax Specialist and a senior officer” (paragraphs 12 and 13). On 6 August 2025 the company filed its notice of appeal — with the tribunal, and not with HMRC (paragraph 14). HMRC issued its view of the matter on 21 October 2025 (paragraph 15) and applied to strike out on 11 December 2025; the company responded on 23 January 2026.

Judge Jennifer Dean determined the application on 30 March 2026 without a hearing, under Rule 26 (default paper cases), on those three documents. The decision was released on 31 March 2026.

What each side argued

HMRC argued that the requirements of section 31A TMA 1970 — in writing, within 30 days of the closure notice, to the relevant officer — had not been met, and that they “are not discretionary and cannot be waived or overridden by incorrect advice” (paragraph 21). HMRC accepted that incorrect information “may” have been given about appeal rights and “regrets any confusion caused”, but said that legitimate expectation and procedural unfairness are for the High Court on judicial review, not for the tribunal (paragraph 20). It also confirmed that if an appeal were now made directly to it, that appeal would be accepted as if made in time (paragraph 22).

The company argued that it had relied on HMRC’s advice, and had asked for and received confirmation of it (paragraph 23). Striking the appeal out would punish it for HMRC’s error and delay a case HMRC had said it did not object to hearing (paragraph 24). It argued that HMRC’s view of the matter letter of 21 October 2025 performed the function of an appeal response, and treated the notice of appeal to the tribunal as a notice of appeal to HMRC. On that footing, notice under section 49D had in substance been given simultaneously (paragraphs 25 and 27(a)). It sought to distinguish the authorities HMRC relied on, on the footing that it raised legitimate expectation not to win the appeal but to avoid delay in having it heard (paragraph 26).

The provision the case turns on

The tribunal and both parties argued the case under the self-assessment provisions of the Taxes Management Act 1970, sections 31 and 31A. Section 31A(1) provides that “Notice of an appeal under section 31 of this Act must be given— (a) in writing, (b) within 30 days after the specified date, (c) to the relevant officer of the Board.” Where the appeal is against a closure notice, subsection (3) fixes the specified date as “the date on which the closure notice was issued” and the relevant officer as “the officer by whom the closure notice was given”.

For a company tax return the equivalent provisions sit in Schedule 18 to the Finance Act 1998. The closure notice is given under paragraph 32, and paragraph 34 carries the appeal against the amendment it makes. Sub-paragraph (3) provides that “[a]n appeal may be brought against an amendment of a company’s return under sub-paragraph (2) or (2A)”. Sub-paragraph (4) provides that “[n]otice of appeal must be given— (a) in writing, (b) within 30 days after the amendment was notified to the company, (c) to the officer of the Board by whom the partial or final closure notice was given.” The requirement is the same in substance either way. The only difference is the trigger: paragraph 34(4)(b) runs the clock from the day the amendment was notified to the company, where section 31A(3)(a) runs it from the issue of the closure notice — in practice the same day, and nothing turned on it here.

Section 49D then governs the step to the tribunal: “(1) This section applies if notice of appeal has been given to HMRC. (2) The appellant may notify the appeal to the tribunal.” It reaches a company’s appeal by a different route from section 31. Section 48(1) TMA defines “appeal”, for the provisions that follow it in Part 5, as “any appeal under the Taxes Acts”. It defines a reference to notice of appeal given to HMRC as one given “under any provision of the Taxes Acts”. Section 49D is therefore the provision that decided this case whichever code the appeal itself was brought under.

The tribunal’s reading turns on those opening words and on the parallel provision in section 49A. “By the use of the past tense, and giving the words of the statute their ordinary meaning, it is clear that the options available to an appellant found in section 49A(2)” (paragraph 33). The options are “to request a review, to wait for an offer of a review to HMRC or to notify the appeal to the tribunal” (paragraph 33). They “only arise where an appeal has already been notified to HMRC” (paragraph 33).

What the tribunal decided

Jurisdiction, the tribunal held, is a question of law (paragraph 29), and not a matter the parties can settle between them — a point taken from the passage in TN (Vietnam) quoted inside the Flash Film extract at paragraph 30. It adopted the reasoning of Judge Anne Redston in Flash Film Transport Ltd v HMRC [2019] UKFTT 0004 (TC), quoting it at length at paragraph 30. The passage that answers the case is at Flash Film paragraph 75, quoted in this decision at paragraph 30. “In my view, the position is the same in relation to TMA s 49D, which provides that an appellant can only notify his appeal to the Tribunal if he has first appealed to HMRC” (Flash Film at paragraph 75). It continues: “HMRC’s care and management powers do not allow them to override that statutory requirement, and it follows that the Tribunal has no jurisdiction to decide a direct tax appeal, unless it has first been made to HMRC” (Flash Film at paragraph 75).

Flash Film also gives the reasons the order exists. The officer receiving the appeal may reconsider, and the appellant may ask for or accept a statutory review by a different officer. Appeals made first to HMRC may be settled without reference to the tribunal at all.

Applying that, “section 31A cannot be met by notifying an appeal to the Tribunal without first having notified HMRC” (paragraph 31). The company had not notified HMRC in writing before notifying the tribunal, so the tribunal had no jurisdiction and the application had to be allowed (paragraph 35).

Two arguments were dealt with squarely. On HMRC’s advice: “It is regrettable that HMRC provided incorrect advice and subsequently confirmed that advice to the Appellant. However, this Tribunal has no jurisdiction to consider the conduct of HMRC or the issue of legitimate expectation, which are matters more appropriately pursued via HMRC’s complaints procedure or by way of judicial review if the Appellant chooses to do so” (paragraph 36). On the complaint response: the extract was not enough, on the material available, to be construed as a notice of appeal (paragraph 37).

The tribunal noted that HMRC’s view of the matter and its confirmation that a late appeal to it would be accepted should limit the delay (paragraph 38). The application was granted and the appeal struck out (paragraph 39).

What it changes for a claim being prepared now

This decision is about a 2021 SME claim, but nothing in it depends on the scheme. The appeal machinery is the same whether the claim was made under the old SME scheme, the merged scheme or ERIS.

  • Appeal to HMRC first, in writing, within 30 days. Send it to the officer who gave the closure notice, and state the grounds. For a company tax return that is what paragraph 34(4) of Schedule 18 FA 1998 requires — the clock runs from the day the amendment was notified to the company — and nothing downstream is available without it.
  • Treat HMRC’s own letters as fallible on process. The letter here was wrong, and HMRC confirmed it when asked. Confirmation from an officer does not create a right the statute does not give.
  • If you want a review, ask after appealing, not instead of it. A statutory review is carried out by an officer not previously involved, and asking for one does not give up the right to notify the tribunal afterwards — but it sits downstream of the appeal to HMRC.
  • Keep the complaint and the appeal separate. A complaint about how an enquiry was handled is not a notice of appeal, and the tribunal will not read one as the other.

A worked illustration. The appeal that would have worked here was a letter dated within 30 days of 9 July 2025, addressed to the officer who gave the closure notice. It would say in terms: “We appeal against the amendments made to the company’s return by your closure notice of 9 July 2025, under paragraph 34(3) of Schedule 18 to the Finance Act 1998. Our grounds are that the expenditure disallowed was incurred on qualifying R&D, for the reasons set out below.” The company could then have notified the tribunal — or asked for a review — at its own pace. Our page on how to appeal an HMRC decision on an R&D claim sets the sequence out in full, and what happens if my R&D claim is rejected covers the options at each stage.

Where it sits against the other decisions

It is one of two decisions in the register where the R&D claim is never examined. Assembly Global Networks is the other: there the question was whether the enquiry was opened in time, here whether the appeal was made in the right order. Neither reached the science. On jurisdiction it belongs with Strictly Money at paragraph 30, on the tribunal’s inability to adjudicate how HMRC ran an enquiry — the same boundary, reached from a different direction.

Judge Jennifer Dean decided this case, Hadee Engineering in 2020 and Beer Express in 2026 — three of the register’s entries. The authority she applies here, Flash Film, is Judge Anne Redston’s, who also decided Flame Tree Publishing.

Has it been appealed?

No onward appeal has been reported, and no Upper Tribunal decision naming BW Interiors appears on the published record. Applications for permission to appeal are not consistently published, so the absence of a reported appeal is not proof that none was sought. The practical position is that the company did not need one: HMRC had confirmed it would accept an appeal made directly to it as if made in time (paragraph 22), so the substantive dispute could begin again at the right step.

HMRC has not changed its published guidance as a result. Nothing in the CIRD manual’s dated change log is attributed to this decision and no Revenue and Customs Brief names it. Whether the wording of HMRC’s pre-closure letters has been corrected is not something the published record shows, and we do not assert it.

The decision is First-tier Tribunal, so it binds only the parties and sets no precedent. Its weight is practical: it is the cleanest published illustration of an R&D claim lost at a procedural step rather than on the science, and of the limits of relying on what an officer tells you. It sits with the rest of the R&D tax case-law register, one page per decision.

Sources

  • BW Interiors Ltd v HMRC — the decision, cited as [2026] UKFTT 00501 (TC), case number TC 09832, appeal reference TC/2025/03939, determined on the papers on 30 March 2026 and released 31 March 2026. Every paragraph number above refers to it unless stated otherwise. The parties block prints the name as “B W INTERIORS LIMITED”.
  • Paragraph 32, Schedule 18 FA 1998 — completion of an enquiry by partial or final closure notice — and paragraph 34, the appeal against the amendment the notice makes and the requirements for the notice of appeal; latest available revised versions.
  • Section 31A TMA 1970 and section 49D TMA 1970 — the self-assessment provisions the decision works from, and notifying the appeal to the tribunal — with section 48 TMA 1970, which carries Part 5 across to appeals under any provision of the Taxes Acts; latest available revised versions.
  • Flash Film Transport Ltd v HMRC — [2019] UKFTT 0004 (TC), TC06913, Judge Anne Redston; the source of the reasoning adopted here, at its paragraphs 73 to 77.
  • ARTG2210 — HMRC’s own guidance on customer appeals within the time limit, and Disagree with a tax decision for the public-facing version.

First-tier Tribunal decisions bind only the parties to them and set no precedent. This entry describes the decision as it stood at the review date above, as general information rather than advice on your circumstances — see our terms. For an answer on your own facts, talk to us.