R&D tax relief •10 min read

M&C Educational Training Services Ltd v HMRC

MJ

Matthew Jones ACA CTA

Last reviewed September 2026 · Editorial standards

Tribunal
First-tier Tribunal (Tax Chamber)
Decided
4 December 2025
Judge
Judge Harriet Morgan and Tribunal Member Mohamood Farooq

HMRC won, and the way it won is the point. The tribunal found both of the company’s witnesses honest and credible, accepted that it had built teaching material that existed nowhere else in the UK, and accepted that professional bodies endorsed the work. The appeal was still dismissed, because the advance the company described was an advance in education — a social science — and not in metallurgy. Teaching existing knowledge better, however well it is done, does not advance the field the knowledge belongs to.

What was at issue

M&C Educational Training Services Ltd was incorporated in 2015, after the metallurgy and materials department at Bradford University closed, by the metallurgist who became its managing director (paragraph 13). It trains part-time and work-based students in metallurgy and materials science, in person and through webinars followed by an e-learning project on a Moodle platform. The tribunal accepted that since 2016 no UK institution has offered formal qualifications in the field at pre-university level with part-time and remote options (paragraphs 12 and 13).

The claims covered the accounting periods ending 31 July 2020 and 31 July 2021. The company claimed additional deductions under section 1044 CTA 2009 of £37,813.00 and £36,362.00, and payable credits of £5,482.89 and £2,200.52. HMRC’s closure notices put £8,704.85 of tax in dispute (paragraphs 1 and 3).

Conditions A and C of section 1044 — small or medium-sized enterprise, carrying on a trade — were common ground. Only Condition D was in issue: whether the company had qualifying Chapter 2 expenditure. That runs through section 1051 to section 1052 Condition B (“attributable to relevant research and development undertaken by the company itself”) and section 1053 Condition A (“attributable to relevant research and development undertaken on behalf of the company”) (paragraphs 4 and 5). The activity said to be R&D was the development of the Moodle-based e-learning platform and the curriculum behind it, in place from 1 July 2019 to 30 June 2021 (paragraph 14).

How the dispute got to a hearing

It was common ground that HMRC had followed the correct process: notices of enquiry under paragraph 24(4) of Schedule 18 FA 1998, then amendments to the returns by closure notices under paragraph 32, issued on 16 May 2023 (paragraphs 1 and 2).

The dispute went through alternative dispute resolution before the appeal, and the company’s complaints about how that was conducted formed part of its case at the hearing (paragraph 41(13)). The appeal, reference TC/2023/08794, was heard before Tribunal Judge Harriet Morgan and Tribunal Member Mohamood Farooq. The managing director represented the company himself; a litigator from HMRC’s Solicitor’s Office appeared for HMRC. He and one other witness gave evidence for the company and both were cross-examined; the tribunal found them “both to be honest and credible and plainly passionate about the teaching of metallurgy” (paragraph 11). The decision was released on 4 December 2025; it does not state the hearing date.

What each side argued

HMRC’s position was narrow and did not attack the quality of the work. It was common ground that metallurgy is a field of science “built on atomic, chemical, and physical principles” (paragraph 9). HMRC argued that the company’s work, as carried out in the relevant periods, “does not advance metallurgy, but instead education and so does not qualify as R&D within the meaning of the Guidelines” (paragraph 9). Its fallback was that the costs claimed had not been shown to be attributable to relevant R&D. On the law, it argued that paragraph 9 of the Guidelines, which introduces the idea of an appreciable improvement, must be read against the definition of an advance in paragraph 6. It is not enough that a product has improved functionality, unless that functionality is achieved “by materially advancing the underlying scientific or technological knowledge in the field” (paragraph 6(8)).

The company’s case, set out over thirteen sub-paragraphs at paragraph 41, was that it had advanced metallurgy as a field. There were no other providers, so filling the gap was itself an advance, and its new teaching methods “addresses technological uncertainties in educational methods within metallurgy”. Creating metallurgical microsections and converting them into ePhotographs for teaching resolved scientific or technological uncertainty. Endorsements from professional bodies and industry showed the work was recognised in the field (paragraphs 41(1) to 41(11)). It also argued that HMRC’s officers lacked the technical competence to assess the claim, and that the ADR process had been one-sided (paragraphs 41(12) and 41(13)).

The provision the case turns on

Section 1041 CTA 2009 takes the meaning of R&D from section 1138 CTA 2010, which takes it from section 1006 ITA 2007, under which the Treasury made the Research and Development (Prescribed Activities) Regulations 2004, SI 2004/712. Regulation 2 gives the Guidelines on the Meaning of Research and Development for Tax Purposes the force of law as tertiary legislation (paragraph 5).

The paragraph that decided this appeal is the Guidelines’ definition of science. The tribunal set it out at paragraph 6(2) from the version then in force — the Guidelines updated 6 December 2010, in which, as the decision records, “[s]cience and technology are defined at paras 15 and 17 respectively”:

“….the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these guidelines….”

Technology is defined by reference to it: “…the practical application of scientific principles and knowledge where ‘scientific’ is based on the definition of science above.”

That wording survives in the current Guidelines, issued by the Department for Science, Innovation and Technology and updated 7 March 2023, where the old paragraph 15 is renumbered 15A: “Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines.” The exclusion is therefore not a feature of the old scheme that has since fallen away. It applies to claims being made now.

What the tribunal decided

The tribunal took the company’s evidence at its highest. At paragraph 15 it accepted, among other things, that the company had created educational content and experiences “designed to bring up-to-date metallurgical understanding and skills to the manufacturing engineering sector”. It accepted that “[t]he information delivered through the appellant’s educational programs constitutes scientific and technological content”. It accepted that the company had made metallurgical microsections and converted them into ePhotographs for educational use, and that professional bodies and named experts endorsed the offering. None of that saved the claim.

The reasoning is at paragraph 42. First, the Guidelines require a project seeking an advance in overall knowledge or capability of a field of science or technology, measured against what is publicly available or readily deducible by a competent professional in that field (paragraph 42(1)). Second, and decisively:

“It is clear from the Guidelines that R&D does not encompass activities comprising (a) the development of unique, new and innovative methods of providing information, education and training which is designed to further the knowledge and/or skills of individuals as regards existing scientific or technological knowledge/capabilities in a particular field of science or technology and/or (b) the provision of that information, education and training.” (paragraph 42(2))

Applying that, every activity relied on was “fundamentally linked to the provision of information, education and training”. The tribunal continued: “The uncertainties and advances to which the appellant and these persons refer are advances in a social science, education, and not in a field of science or technology.” There was no suggestion in any of the evidence that the company’s own activities “in any way furthered publicly available knowledge of any aspect of the scientific field of metallurgy/materials or advanced capability in that field” (paragraph 42(3)).

Paragraph 42(4) deals with the argument most likely to be made again: that widening the pool of trained people benefits the field. The tribunal’s answer covered “Increasing and/or improving the workforce by using innovative ways of educating and training them with existing publicly available knowledge and existing capabilities in the field of metallurgy” (paragraph 42(4)). Doing that “does not mean that the appellant itself has made an advancement in the relevant field of science itself within the meaning of the Guidelines” (paragraph 42(4)).

Because the claim failed on the field, the costs were never examined: “we have concluded that the appellant’s activities in the relevant periods did not constitute R&D within the meaning of the Guidelines. Therefore, we have not found it necessary to consider the costs in question” (paragraph 10). The tribunal was equally short on HMRC’s conduct and the ADR complaints. It is “not the role of the tribunal to consider the appellant’s complaints as regards HMRC’s conduct in relation to the appellant whether as part of the alternative dispute resolution procedure or otherwise” (paragraph 43). The appeal was dismissed (paragraph 44).

What it changes for a claim being prepared now

  • Name the field before anything else, and check it is one the Guidelines recognise. Education, training, pedagogy, management, economics and the rest of the social sciences are outside paragraph 15A, however technical the subject being taught.
  • Separate the medium from the content. Paragraph 43 of the Guidelines is the line to work to: “Information or other content which is delivered through a scientific or technological medium is not of itself science or technology. However, improvements in scientific or technological means to create, manipulate and transfer information or other content can be scientific or technological advances, and resolving the scientific or technological uncertainty associated with such projects would therefore be R&D.” A claim about a learning platform has to be about the platform’s engineering, not the syllabus it carries.
  • Write the advance as a sentence about the field, not about your customers. Saying that no UK provider offers the training is a statement about the market. The sentence that would have had to be true here is of a different kind: that the work extended what a competent metallurgist could publicly know or do. An example would be developing a specimen preparation or imaging method that metallurgists did not have and could not readily deduce.
  • Expect the whole project to go. Where the only advance a project relies on is in the wrong field, nothing in that project qualifies and its costs are never reached — here the tribunal said in terms that it had “not found it necessary to consider the costs in question” (paragraph 10). A claim spanning several projects is tested project by project.

Where it sits against the other decisions

Judge Morgan also decided Quinn (London) Ltd, the origin of the subsidised-expenditure line. Here she applied two authorities the register already carries. The first is the competent-professional formulation adopted in Flame Tree Publishing, that such a person must “demonstrate appropriate qualifications, experience and up-to-date knowledge of the relevant scientific and technological principles involved” (paragraph 7). The second is Gripple Ltd v HMRC [2010] EWHC 1609 (Ch) at [12] on going through the conditions one by one (paragraph 8).

It pairs most closely with Tanglewood Care Services, where the advance was also measured against the field rather than the company, and it is the cleanest authority available on the boundary the Guidelines draw around science. The jurisdiction point at paragraph 43 is one several tribunals have now made: complaints about how HMRC has run an enquiry belong to judicial review or the complaints process, not to a tax appeal. The other decisions sit in our register of R&D case law.

Has it been appealed?

No onward appeal has been reported. The 56-day window for applying for permission to appeal ran from the decision being sent to the parties in December 2025, and has long closed. But applications for permission are not published, so the absence of a reported appeal is not proof that none was sought.

HMRC has not changed its published guidance as a result of this decision. Nothing in the CIRD manual’s dated change log attributes an amendment to it, and it is not named in the published Research and Development Communication Forum minutes.

The decision is First-tier Tribunal, so it binds only the parties and sets no precedent. Its value is that it states plainly, with the Guidelines paragraph in front of it, a boundary that companies in training, e-learning and education technology cross without noticing.

Sources

CIRD81300 is indexed on our CIRD reference index, with HMRC’s own title for it, a line on what it says and the date HMRC last revised it.

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.