Tanglewood Care Services Limited v The Commissioners for HMRC

Facts

Tanglewood Care Services Limited, incorporated on 2 June 2015, operates residential nursing care facilities and ran seven care homes during the period in question. It filed its corporation tax return for the accounting period ended 31 January 2021 on 28 February 2022 without claiming enhanced research and development relief, but on 9 September 2022 submitted an amended return claiming enhanced R&D expenditure of £880,286 in respect of a single project entitled "Managing outbreak & effects of a Global Pandemic in a residential care home (Covid-19)". The company said the project sought to develop and optimise a combination of measures — extensive PPE use, testing regimes, visitor restrictions, cohorting of residents, enhanced cleaning, social distancing, staff segregation, track and trace systems and vaccination programmes — to limit transmission while maintaining the wellbeing of residents and staff. HMRC took the view that the company was applying existing scientific knowledge of infection control and virus transmission to its own operational circumstances rather than seeking an advance in science or technology, and issued a Closure Notice under paragraph 32(1A) Schedule 18 Finance Act 1998 removing the claim and amending the corporation tax liability accordingly. The company appealed to the First-tier Tribunal, the agreed principal issue being whether the activities relied upon constituted research and development for the purposes of Part 13 CTA 2009 and the BEIS Guidelines.