R&D tax relief •4 min read

Tanglewood Care Services Ltd v HMRC

MJ

Matthew Jones ACA CTA

Last reviewed September 2026 · Editorial standards

Tribunal
First-tier Tribunal (Tax Chamber)
Decided
6 August 2026
Judge
Judge Stapenhurst and Mr Julian Sims

The claim was dismissed. A care operator had claimed £880,286 of enhanced R&D expenditure for infection-control work across seven residential care homes in the year to 31 January 2021; HMRC removed it, and the appeal failed. What makes the decision useful is that the tribunal accepted most of the claimant’s legal arguments and refused the claim anyway, on the evidence.

We cover this decision in full in a separate article, including what it says about how a claim comes to be made in a sector HMRC had already written to. This entry is the register summary.

What was at issue

Whether pandemic infection-control work in care homes — deploying, balancing and managing measures across seven homes — was R&D within the Guidelines at all. Four tests had to be satisfied at once: a project, an advance in science or technology, scientific or technological uncertainty, and a competent professional who could not readily resolve it. The period ended in January 2021, so the old SME scheme and the 2010 Guidelines applied (paragraph 21).

What the tribunal decided

Appeal dismissed. But read what HMRC lost first, because it is the more useful half.

The tribunal held that no formally documented plan is required: a coordinated programme of gathering, review and implementation towards a defined objective was enough to be a project, expressly unlike Hadee Engineering (paragraph 87). It declined to read the Guidelines as requiring an advance in underlying knowledge in every case — advances may arise from resolving uncertainty that affects capability as well as knowledge (paragraph 94). It rejected HMRC’s submission that the claim must fail because the individual measures were already known, and held the company did not have to be advancing scientific understanding of the virus (paragraph 98). It accepted that uncertainty can arise from the interaction of multiple measures within a system (paragraph 104).

The claim still failed. The activities were directed at the company’s own operations, and the evidence did not show they aimed at an advance in knowledge or capability beyond them (paragraph 99). Uncertainty in the wider scientific community does not establish that a claimant’s own activities were directed at resolving scientific or technological uncertainty (paragraph 105). Staffing, visitor policies, admissions, PPE and compliance were real problems, but “predominantly operational and managerial in character” (paragraph 106), and social-science work sits outside the definition (paragraph 107).

Two evidential findings closed it. The three witnesses were found honest, conscientious and experienced in the care sector, but none claimed expertise in a scientific or technological discipline that could tell the tribunal what the state of knowledge in the field was (paragraphs 111 to 113). And the work, extensive and expensive as it was, did not amount to a systematic process of investigation or experimentation directed at resolving scientific or technological uncertainty (paragraph 115).

What it changes for a claim being prepared now

  • Measure the advance against the field, not against yourself. Being ahead of where you were, or ahead of official guidance, is not an advance in science or technology. The tribunal found the company had moved before later Government guidance did (paragraph 80) and it made no difference.
  • Separate operational difficulty from technological uncertainty, in writing, while the work runs. In a hard year the two feel identical. Three years later, at an enquiry, they read completely differently.
  • Bring someone who can speak for the field. The tribunal was explicit that its point was not that the field had to be virology. It was that nobody could tell it what a competent professional in the relevant field already knew.
  • Record the method. Effort and expenditure are not a systematic investigation. Hypothesis, test, result, next iteration is.

Has it been appealed?

Not settled, and it is too early to say it is. No onward appeal has been reported and no Upper Tribunal decision in the case appears on the published record as at the review date above. But the decision gives the parties 56 days from the date it was sent to apply for permission to appeal, which on the decision date of 6 August runs to about 1 October 2026 — and applications for permission are not published in any event. We update this entry if anything is reported.

This is a First-tier Tribunal decision on its own facts. It puts no sector outside the relief, and on the points of principle the tribunal went the claimant’s way.

Sources

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.