A recent tax tribunal decision has allowed a company to retain £335,000 in R&D tax relief, even though the projects it claimed for were later judged not to qualify. This is not a celebration of a technical win but more a mourning of this case as it makes the R&D scheme and HMRC look bad.
The tribunal case in question was Realbuzz Group Ltd v HMRC, was decided in May 2025. The decision hinged not on the technical merits of the R&D claim, but on whether HMRC acted within the legal time limits available to them. Because they did not, taxpayers will foot the bill for an R&D claim that did not qualify.
The Simple Explanation
Realbuzz submitted an R&D claim in its 2021 tax return. HMRC reviewed it and concluded that the projects did not qualify. Some of the work, such as improving basic website functions, appeared far from the standards required for R&D tax relief.
However, the same projects had already been claimed in the 2020 return, for which HMRC had not raised any issues within the standard enquiry window (within a year of the filing date). After rejecting the 2021 claim, HMRC tried to go back and claw back the 2020 relief too. They issued what is known as a discovery assessment, arguing that their findings in 2021 revealed that the 2020 claim was also invalid.
The tribunal rejected this. It found that the 2020 submission already included enough supporting information and project descriptions for HMRC to make a judgement at the time. The judge concluded that nothing was “discovered” during the 2021 enquiry that could not have been known from the documents submitted in 2020. Since the statutory deadline to enquire into the 2020 return had passed, HMRC was out of time.
The result? Realbuzz kept the £335,000 relief from 2020, even though the same projects were later judged to be ineligible. The company won on procedural grounds – not because the work was qualifying R&D.
As a tax advisor, I will criticise HMRC when they act unfairly or are wrong on the law. I do also think a return has to be safe at some point especially given the wild variances seen in HMRCs compliance assessments in recent years. In this instance, however, their moral position was strong. As a taxpayer myself, who thanks God for the excellent treatment my wife and daughter had in an NHS hospital when my daughter was born, I find the outcome disappointing. The amount involved could deliver a lot in the NHS, it could pay the average annual salary of almost ten nurses.
What This Means for Claimants
Despite losing this case, HMRC’s recent trend is clear: greater scrutiny, more enquiries, and an increased willingness to challenge claims from previous years when possible.
But there are rules they must follow. Once the standard enquiry period closes, 12 months from the date a return is filed, HMRC can only go back if they can show that something was not disclosed, or that there was carelessness or fraud. If a company has provided clear and honest information, HMRC may be blocked from reopening the matter later.
The Role of Supporting Evidence – Then and Now
In the Realbuzz case, one crucial point is that the company had submitted detailed documentation with its 2020 claim. This ultimately protected it. The judge ruled that HMRC had the information they needed at the time and failed to act on it. It shows that discovery is difficult when an R&D claim is well documented and that evidence is provided to HMRC. Unless the law changes in most cases HMRC have a year from filing to act.
Well-prepared supporting evidence is crucial. Before August 2023, the provision of supporting documents was voluntary and varied widely between claimants. However, from August 2023 onwards, HMRC introduced the Additional Information Form (AIF) as a mandatory requirement. Every R&D claim must now follow a set format and include answers to specific questions about each project.
This change makes it much harder for HMRC to argue that relevant facts were not disclosed. Provided the answers are honest and accurately reflect the claimant’s position, the structured nature of the AIF should reduce the risk of late challenges via discovery assessments on project qualification. Ironically, what protected Realbuzz’s 2020 claim, detailed supporting information, is now the minimum requirement for all claims.
The Real Takeaway
This is not a case that should encourage careless or aggressive R&D claims. If anything, it should remind companies that:
- HMRC can and will challenge claims, even years later, if the legal window remains open.
- Accurate, transparent, and timely disclosure of supporting information is essential.
- Even if a company escapes repayment on procedural grounds, it risks reputational damage and potential denial of future claims if the underlying projects do not qualify.
For HMRC: They need to stop taking R&D cases to Tribunal they lose. I could see unscrupuous people who game the tax system taking heart from this decision. The legal department has looked very poor in recent years, this is the fifth R&D related Tribunal loss in less than two years. They may argue it reflects less on HMRCs legal arm than the R&D one. Given how few of these cases their are it gives a bad impression if HMRC lose them. HMRC have a huge advantage at Tribunal in that they can concede before a hearing and avoid the publicity of a Tribunal decision. Tribunal decisions are crucial to anyone appealing and the more HMRC lose the less credible they look and the more precedent appellants have to aid their cases.
The law of discovery appears clear. The Tribunal in Realbuzz ruled that HMRC missed its chance, and by law, they could not act. But the substance of the claim was still flawed, and the cost is now borne by the wider taxpayer. Companies should not mistake this as a green light to take risks. They should view it instead as a warning to get claims right the first time – both technically and procedurally. One response from HMRC may be to move quicker. Advisers must respect the scheme and not bite the hand that feeds them. Ultimately the scheme might not last for ever, for more than half my life the UK had no R&D scheme (Introduced in 2000), enough bad news and that could happen. Tribunal losses for HMRC are very public bad news.
If you are preparing an R&D claim or facing an enquiry, and would like experienced support, please contact us.
Christopher Toms MA MAAT
Compliance Director
RandDTax