R&D tax relief •10 min read

MW High Tech Projects UK Ltd v HMRC

MJ

Matthew Jones ACA CTA

Last reviewed September 2026 · Editorial standards

Tribunal
First-tier Tribunal (Tax Chamber)
Decided
5 December 2023
Judge
Judge Anne Redston and Ms Jo Neill

HMRC won, on all nine grounds. An engineering and construction company had claimed a Research and Development Expenditure Credit of £1,934,343.19 and lost the whole of it. Its latest published accounts had been drawn up on a basis other than going concern, and the statute extinguishes the payment when that is so. Nothing turned on whether the work was R&D. It is the only decision we have found on the going-concern condition, and the only one we have found that concerns RDEC.

What was at issue

The company is an engineering and construction business owned by M+W Group GmbH. Its accounts describe its principal activities as “the design and project management of clean room, technical, manufacturing, research facilities and Energy from Waste (EFW) plants”. The tribunal recorded that its projects carry considerable risk because the technology is expensive and requires significant research and development (paragraph 27).

The Energy from Waste contracts went badly. By the end of 2016 the company was making heavy losses, and in January 2017 the group decided to exit that sector, completing three existing contracts and taking on nothing new. The 2017 accounts showed a loss before tax of more than £135m and net liabilities of £197m. In July 2018 the group decided the company would stop tendering altogether and that its sales pipeline would pass to other group companies (paragraphs 28 to 30).

The decision opens with the claim: “On 4 April 2019, MW High Tech Projects UK Ltd (‘the Appellant’) filed its corporation tax (‘CT’) return for the year ended 30 December 2017. That return included a claim for a Research and Development Expenditure Credit (‘RDEC’) of £1,934,343.19” (paragraph 1). The tribunal was not told what the claim related to (paragraph 50), and did not need to be. The issue was whether sections 104S and 104T CTA 2009 extinguished the payment because both the 2017 and the 2018 accounts stated the company was not a going concern.

How the dispute got to a hearing

The dates do the work, because the statute fixes entitlement by reference to the accounts published at two particular moments.

The 2017 accounts were not filed by their due date — nine months after the 30 December 2017 year end (paragraphs 32 and 78(1)). After reminders and the threat of legal action against the directors, two directors signed them on 22 March 2019, KPMG on 28 March 2019, and Companies House received them on 3 April 2019 (paragraph 32). The return carrying the claim was filed the next day. The 2018 accounts were signed on 17 October 2019 and received on 21 October 2019 (paragraphs 44 and 49). Neither was prepared on a going concern basis.

The adviser chased payment from 26 July 2019. HMRC said on 15 November 2019 that an enquiry would be opened, apologising for a backlog (paragraphs 51 and 52). The opening letter went out on 10 December 2019 (paragraph 53); the decision dates it 11 December at paragraph 153. The officer closed the enquiry on 26 April 2021 on the basis that no RDEC was payable (paragraph 54). The refusal is recorded as made on 3 May 2021 (paragraph 3).

The company then changed auditor, and its accounts for the year to 30 December 2019 were prepared on a going concern basis (paragraph 55). HMRC later paid the RDEC claimed in the 2018 return, because by then those were the latest published accounts (paragraph 61).

The company appealed on 26 June 2021, accepted a statutory review on 3 August 2021, and the review upheld the refusal on 3 December 2021. Notification to the tribunal followed in time on 30 December 2021 (paragraph 62). The appeal was heard at Taylor House on 24 October 2023 and released on 5 December 2023.

What each side argued

HMRC’s case was short. On the plain wording of the provisions, no payment was due as a matter of law (paragraph 4). Section 104T fixes going-concern status by the latest published accounts. On 4 April 2019 those were the 2017 accounts, which said the company was not a going concern. On the last day for amending the return, 30 December 2019, they were the 2018 accounts, which said the same. It is not possible to go behind published accounts and ask whether they were right (paragraph 95).

The company ran nine grounds, several in the alternative (paragraph 4). Two attacked the reading of the statute: that the provisions must be construed purposively, relying on Inco Europe Ltd v First Choice Distribution; and that Parliament had since agreed section 104T contained an error the tribunal should give effect to. Four attacked the accounts. The first three were that the 2019 accounts contained a prior period adjustment with retrospective effect; that the company was in fact a going concern under the accounting rules; and that its status accorded with the auditing standard ISA 570. The fourth was that the finance director had held the view it was a going concern but was “pressured” by the auditors to state the opposite. Three turned on HMRC’s own conduct and concessions: that paying the 2018 claim amounted to acceptance; that the enquiry had been delayed deliberately so the accounts could not be corrected in time; and that HMRC should pay under Extra Statutory Concession B41.

Underlying most of them was a fairness point: a company filing accounts on a non-going-concern basis is treated worse than one in administration, which can leave that state before the deadline (paragraph 78).

The provision the case turns on

Section 104S(2) provided that if “at the time of claiming the credit the company was not a going concern”, the company “is not entitled to be paid that amount” and “that amount is extinguished”. Section 104S(3) gave it back if the company “becomes a going concern on or before the last day on which an amendment of the company’s tax return for the accounting period could be made”. Section 104T(1) defined the term: a company is a going concern if “its latest published accounts were prepared on a going concern basis”, and nothing in them indicates they were prepared on that basis only because of an expected RDEC. Section 436(2) of the Companies Act 2006 supplies the meaning of publication. These are the point-in-time texts as at 4 April 2019; both were later superseded, and Chapter 6A was omitted for accounting periods beginning on or after 1 April 2024.

The test is documentary. It asks what the accounts say, not what the business was doing.

What the tribunal decided

The appeal was dismissed and HMRC’s decision upheld (paragraph 157). Four findings carry it.

First, the reach of section 104T. The tribunal agreed with HMRC and added a point of its own: “We note in particular that s104T is specifically stated to apply to both 104S(2) and (3)” (paragraph 75). The section “does not only determine whether the company ‘is a going concern’ at the time it makes the claim” (paragraph 75). It “also applies to s 104S(5), which gives entitlement if the company subsequently ‘has become a going concern’ as long as it has done so by the last day” (paragraph 75). Both gates are closed by the same document. (The decision refers throughout to “s 104S(5)”; the subsection that gives entitlement back is numbered (3) in the text in force at the time.)

Second, purposive construction. Inco had no application: the company offered no evidence that Parliament had by inadvertence failed to give effect to its purpose, its case being that Parliament had given the point “insufficient consideration”, which is a different thing (paragraph 81). A purposive reading does not license ignoring the words, particularly in what the tribunal, following Gripple, called a “detailed and prescriptive code” (paragraphs 82 and 83).

Third, the later amendment. Section 104T was amended by Finance (No 2) Act 2023 to treat accounts as prepared on a going concern basis where the only reason they were not was a transfer of trade and R&D within a group. That did not help: “The FA23 amendments are not retrospective and so do not apply to the Appellant’s RDEC claim” (paragraph 90(1)). Nor could a Treasury policy paper displace clear words.

Fourth, the accounts themselves. On expert accountancy evidence the tribunal made three findings. Drawing the accounts up on a non-going-concern basis was no breach of the accounting standards (paragraph 116). Reliance on a supposed change to ISA 570 was misplaced, and auditing standards do not determine the directors’ responsibility in any event (paragraph 125). There was no prior period adjustment in the 2019 accounts, and one would have changed nothing in the published 2017 and 2018 accounts had there been one (paragraph 150). On the evidence that the director had signed accounts he believed to be wrong, the finding was flat: the finance director “did not believe, at the time he signed the 2017 and 2018 accounts, that the Appellant was a going concern” (paragraph 132).

Two grounds failed for want of jurisdiction. On the allegation of deliberate delay, “whether HMRC acted in an improper or unfair manner is a matter for judicial review or a complaint” — and HMRC had until 30 April 2020 to open the enquiry and did so well within the window (paragraph 153). The tribunal had no jurisdiction over the extra-statutory concession either (paragraph 156).

What it changes for a claim being prepared now

  • Check the going-concern basis of the latest published accounts before filing. The condition bites on a document, and it bites twice: at the date of claim and at the last day for amending the return. A claim can be arithmetically perfect and pay nothing.
  • Where a trade or R&D is moving within a group, plan the accounts and the claim together. This is the case the later carve-out was written for, and the company fell the wrong side of it. Groups and connected companies sets out the related traps.
  • Do not expect the tribunal to look behind the accounts. Arguments that they were wrong, that the standards required otherwise, or that the directors signed under pressure all failed. The accounts are the fact; correcting them happens under the Companies Act, not at a hearing.
  • A paid claim in one year proves nothing about another. HMRC paid the 2018 credit because the 2019 accounts had by then been published on a going concern basis — consistent with refusing 2017, not an admission about it. See does HMRC paying my claim mean it was approved?

This decision is about the old RDEC scheme in Chapter 6A of Part 3 CTA 2009, omitted for accounting periods beginning on or after 1 April 2024. The condition survives in consolidated form. Sections 1112F and 1112G CTA 2009 now restrict both the merged scheme and Enhanced R&D Intensive Support. Section 1112G(1)(a) keeps the same documentary test — “its latest published accounts were prepared on a going concern basis” — and section 1112G(5) carries the group-transfer relaxation into the current schemes. The points on insolvency and R&D tax relief and accounting treatment follow from the same provisions.

Where it sits against the other decisions

It is the only decision we have found on the going-concern condition, and the only one we have found that concerns RDEC. Judge Redston also decided Flame Tree Publishing and the preliminary issue in Assembly Global Networks, and the same insistence on the words of the provision runs through all three.

Its jurisdictional finding at paragraph 153 joins a consistent line. M&C Educational Training Services Ltd [2025] UKFTT 1506 (TC) at paragraph 43 and Strictly Money Ltd [2024] UKFTT 866 (TC) at paragraph 30 both say the same: on an appeal against an assessment, how HMRC ran the enquiry is not something the tribunal’s powers engage.

One trap when searching: Court of Appeal decisions naming this company — Outotec (USA) Inc v MW High Tech Projects UK Ltd [2024] EWCA Civ 844 — are construction litigation, not tax. The register carries a similar warning on Hadee Engineering.

Has it been appealed?

No onward appeal has been reported, and no Upper Tribunal decision on this tax appeal 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.

HMRC has not changed its published guidance as a result. The going-concern page, CIRD81130, still frames the condition around sections 1046, 1057 and 104T rather than the current 1112F and 1112G, and cites no case. Nothing in the manual’s dated change log is attributed to this decision.

The decision is First-tier Tribunal, so it binds only the parties and sets no precedent. Its weight is that the reasoning is statutory rather than evidential: the same words, in their current home, produce the same answer. The other decisions sit in the register of R&D case law.

Sources

CIRD81130 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.