Realbuzz Group Ltd v Revenue and Customs (CORPORATION TAX - DISCOVERY ASSESSMENT - research and development relief - whether officer should reasonably be expected to have been aware of excessive claim for relief when enquiry window closed - what information was made available to the officer?) [2025] UKFTT 493 (TC) (01 May 2025)

Parties

Procedural Posture

Corporation Tax Appeal (discovery Assessment) / First Tier Tribunal (tax Chamber) Substantive Judgment

Legal Issues

1. 1 Whether HMRC was entitled to raise a discovery assessment under Schedule 18 Finance Act 1998 for excessive R&D relief claimed by the appellant for APE 2020
2. 2 Whether a hypothetical HMRC officer could reasonably have been expected, on the basis of the information made available before the enquiry window closed, to be aware of the excessive relief
3. 3 Whether the information made available included only the 2020 Report or also the 2021 Report

Ratio Decidendi

The Tribunal held that the hypothetical officer, on the basis of the information made available before the enquiry window closed (i.e., the 2020 corporation tax return and 2020 R&D Report), could not reasonably have been expected to be aware that the entire R&D relief claim was excessive. The Tribunal found that while some projects were clearly non-qualifying, others were not obviously so, and the technical complexity and lack of detailed cost attribution meant further enquiry would have been required. The Tribunal also held that quantification of the insufficiency was not required for the bar to apply. Accordingly, HMRC was entitled to raise the discovery assessment.

Court Disposition

Appeal dismissed

Orders

• The discovery assessment issued by HMRC on 1 June 2023 disallowing the R&D relief claim for APE 2020 in the sum of £335,452.57 is upheld.
• The appellant is required to repay £335,452.57 plus interest.