Tanglewood Care Services Limited v HMRC
Case number: TC09978
25 August 2026
RDM is a wine merchant that wanted to develop a recyclable canned wine product that could be sold at outdoor events whilst preserving the quality of the wine. Products did exist, but the focus here was to have 187ml of wine in a 200ml can whilst maintaining quality and shelf life.
RDM worked with a third party in South Africa, Riebeek, and it can be assumed that the relationship had soured through the period. Evidence at the time and in the preparation of the appeal did not demonstrate a clear timeline.
In the appeal, there were various sources of written evidence that the tribunal allowed, as well as verbal evidence given by the main director of RDM, Mr O’Sullivan. The tribunal found the evidence difficult to follow but did make the point, as did HMRC, that they did not think the evidence being presented was dishonest.
The tribunal attempted to lay out the facts as they had been presented and, with that, found in favour of HMRC. The burden and standard of proof relied mainly on information after the fact. There was limited agreement between RDM and Reibeek, which in itself presented challenges when considering the appeal. Therefore, the burden of proof was not met.
Further, the tribunal could not be satisfied that there had been a project. The tribunal did not find that the activities presented aimed to achieve an advance in science or technology or that there was a competent professional.
This is a positive outcome because it gives businesses certainty and consistency – the conditions we all so desperately need. HMRC may sometimes be unpredictable, but as the tribunal cases continue and we see a fair, reasonable, taxpayer-friendly environment where the expectations of businesses claiming R&D tax relief are clear. We may continue to see some inconsistency and challenge from HMRC, but that is an expected element of our tax system. It is not something that should be feared, knowing that the courts bring discipline and show a steadfast approach.
The evidence burden for an R&D tax relief claim comes with a clear expectation that there will be contemporaneous records to demonstrate the activities that are being claimed for. When making an R&D tax relief claim, you don’t need to submit everything initially. The job of the advisor is to know what is needed in the Additional Information Form (AIF) and supplementary report, on what evidence its based, and, if an enquiry or indeed an appeal happens, the next level of information that can be leveraged to support the claim.
Project hallmarks and the role of competent professionals are underlined again. This appeal may suffer due to the time lag from the initial claim to now. In that time, the lessons learned through FTTs and HMRC guidance have become clearer for both advisors and businesses.
Frankly, I don’t understand why this reached an appeal process. Regardless of the merit of the argument, this reveals a laissez-faire approach to the tribunal preparation. There are enough advisors and professionals around to know that this was not a case that had merit, it simply did not have the information available to structure an argument. My assumption would be that if a KC was asked to review, they would advise the client not to bring an appeal – even if the client felt passionately about the activity and the argument was technically focused. The grounds of appeal are weak to begin with.
A lesson to all businesses claiming R&D tax relief, make sure you have advisors around who know whether to stick or twist – better still, get the job done right in the first place so that you aren’t relying on after-the-fact evidence.
Case number: TC09978
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Case number: TC09358