How a recent Tribunal ruling affects your R&D tax credit claim
Only a couple of weeks ago, I voiced the opinion that the Revenue and its lawyers were misusing “burden of proof” unlawfully, to reject claims that otherwise would qualify. I argued that taxpayers who had already offered reasonable evidence to HMRC to suggest their R&D was compliant could use the precedent in Wood v Holden to pass the burden of proof back to the Revenue.
It turns out, the Tribunal agrees with me. As the timely and welcome victory for Get Onbord shows, the Revenue can’t just keep saying no without justification, and the judge cited the same precedent when ruling.
The ruling also puts a stop to the exasperating trick where the Revenue rejects all of an advance if one component isn’t novel, for example rejecting an application with a novel function because the programming languages exist. As I mentioned in June, this was an argument clearly not supported by BEIS and now a judge has called it out.
The Get Onbord ruling is a welcome landmark not just for software claims, but for any advance where a key uncertainty is how to combine known components or materials to a novel effect, per BEIS 29 & 30.
Lastly, the ruling nixes HMRC’s recent efforts to invalidate seasoned competent professionals, simply because they may not have a relevant academic qualification.
All in all a major turning point and vindication. I imagine the ruling is going to get a lot of citations.
Richard Lewis MISTC
Senior Technical Consultant
