In MegaBlue Technologies (in liquidation) v HMRC [2022] TC08376, the First Tier Tribunal (FTT) dismissed an appeal brought for unfair treatment by HMRC as it was outside of the powers of the tribunal to rule on such matters.

  • The company had previously applied for R&D Tax Credits, which on both occasions were paid within 28 days and with no enquiry.
  • A third claim was submitted with HMRC starting an enquiry 81 days later with no interim payments made, contrary to HMRC Guidance.
  • The company went into liquidation a few months later citing the lack of payment as one of the reasons. HMRC then refused the tax credit on the basis that the recipient must be a going concern, which the company Appealed on the basis of unfair and unreasonable treatment by HMRC.

The FTT has no powers of judicial review and the judge was only able to consider whether the assessment to disallow the tax credit was correct. There was no capacity to judge whether the decision to make the amendment had been fair or not or to consider whether HMRC had been guilty of poor case management.

The appeal was dismissed as the assessment was correct, however, the judge did suggest that the company may be able to use HMRC's complaints procedure or apply to the Adjudicator's office for review.

Useful guides on this topic

R&D: SME Tax Credit scheme
What Research & Development (R&D) schemes are available for small and medium sized companies undertaking R&D? How to make an R&D claim? What are the qualifying costs and how much can be claimed?

Appeals: Ground for Appeal Toolkit
What grounds are there to appeal a tax penalty? How can you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse? 

External link

MegaBlue Technologies (in liquidation) v HMRC [2022] TC08376


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