RDM Wines Limited v The Commissioners for HMRC

Facts

RDM Wines Limited, incorporated in 2008, imports and distributes fine wines in the United Kingdom under the name Fine Wines Direct UK. On 5 October 2022 it amended its corporation tax return for the accounting period ended 31 October 2021 to claim R&D relief. The claim related to a project to develop a high-quality wine in a can, suitable for concerts and sporting venues where drinks cannot be sold in glass. RDM said that Riebeek Valley Wine Co., a South African producer, carried out a series of tests for it from May 2021 to November 2022. The tests covered can linings, wines and filler gases, and included filling 200ml cans with 187ml of wine and inert gas. RDM said its own staff managed the project and taste-tested the samples. HMRC opened an enquiry under paragraph 24 of Schedule 18 to the Finance Act 1998. By a closure notice dated 18 December 2023, it disallowed the claim and required additional corporation tax of £14,972.95 and repayment of a tax credit of £28,414.06. HMRC accepted that Conditions A and C were met. It disputed Condition D in section 1044 of CTA 2009: that RDM had qualifying expenditure on research and development under section 1052 of CTA 2009 or section 1053 of CTA 2009. The closure notice was upheld on review on 31 October 2024, and RDM appealed to the First-tier Tribunal on 20 November 2024.