Beer Express Ltd v HMRC [2026] UKFTT 672 (TC): A Cautionary Tale for R&D Tax Credit Claimants
Beer Express Ltd v HMRC [2026] UKFTT 672 (TC): A Cautionary Tale for R&D Tax Credit Claimants
The First-tier Tribunal's decision in Beer Express Ltd v HMRC [2026] UKFTT 672 (TC), handed down on 6 May 2026, offers a timely reminder of what it actually takes to succeed in an R&D tax relief claim , and, perhaps more pointedly, what happens when the evidential foundations are not established.
Background
Beer Express Ltd is a wholesale drinks business operating six depots across the North of England, alongside a single retail pub. For the accounting periods ending 30 June 2020 and 30 June 2021, the company submitted amended corporation tax returns claiming enhanced R&D relief under Part 13 CTA 2009, totalling over £490,000 across both years. The claims were prepared and submitted by a third-party R&D advisory firm, RDT Active, which, as events unfolded, had become uncontactable by the time HMRC came calling.
HMRC opened compliance checks, issued a pre-decision letter rejecting the claims, and ultimately issued closure notices disallowing the relief in full. The company appealed, pursued an independent review (which upheld HMRC's position), and eventually brought the matter before the Tribunal.
The Projects
Four projects were claimed across the two periods. In broad terms these were: an AI-enabled inventory and demand forecasting system (level loading); the development of a new pale lager beer, "Penny Gill Lager"; a rebranding and remarketing exercise converting the Penny Gill products from keg to bottle; and a B2B web platform combined with logistics and stock monitoring software.
The claims, as described in the R&D reports, were not modest in their ambition. References were made to algorithm development, embedded systems integration, hop selection uncertainty, microbial growth control, and bespoke software architecture.
The Legal Framework
The Tribunal set out the applicable framework clearly. Relief under section 1044 CTA 2009 requires, among other conditions, that the company has qualifying expenditure attributable to relevant R&D. The meaning of R&D flows through section 1041 CTA 2009, section 1138 CTA 2010, section 1006 ITA 2007 and ultimately the BEIS Guidelines, which carry the force of tertiary legislation. Under those Guidelines, R&D requires a project seeking to achieve an advance in overall knowledge or capability in a field of science or technology, through the resolution of scientific or technological uncertainty.
The sole issue for the Tribunal was whether Beer Express had discharged the burden of proving those tests were met.
Why the Appeal Failed
The Tribunal found Mr Narang, the company's founder and sole witness, to be entirely credible and honest. The problem was that he simply did not have sufficient knowledge of the technical detail of the projects to satisfy the evidential requirements. He had overseen the business direction, approved the projects, and reviewed the R&D reports before submission. But he had not been involved in the design, implementation, or technical execution. He acknowledged he had no background in software engineering and could not say whether the software developed was "any better than the next guy."
The only individual with relevant technical expertise was not called as a witness. He had since retired to India. The head brewer engaged for the lager project was similarly absent. The authors of the R&D reports gave no evidence. The result was a claim supported entirely by documents drafted by an advisory firm that no longer existed, with no competent professional to speak to their contents.
The Tribunal applied the approach established in AHK Recruitment Ltd v HMRC [2020] UKFTT 232 (TC) and Flame Tree Publishing Ltd v HMRC [2024] UKFTT 349 (TC), holding that without evidence from someone with relevant expertise, the claims amounted to no more than bare assertions. The R&D reports, however well-structured, carried no evidential weight without a competent professional to stand behind them.
The Wider Lesson
This case is, unfortunately, a pattern the Tribunal has seen before: a legitimate business, approached by an R&D advisory firm promising tax refunds, submits claims it does not fully understand, the advisory firm disappears, and HMRC demands repayment. The company bears the consequences.
Several points stand out for businesses and their advisers. First, the quality of the underlying claim documentation matters enormously, but documentation alone is not enough. Someone with genuine technical knowledge must be available to give evidence if the claim is challenged. Second, R&D claims must be grounded in identifiable scientific or technological uncertainty and not commercial uncertainty, market risk, or the bespoke nature of a project. The desire to develop a product that suits a specific business is not, without more, R&D. Third, the involvement of an R&D specialist firm does not transfer the evidential burden. That burden remains with the claimant company throughout.
Beer Express is a decision that reinforces the notion that the bar for relief is a high one, and that procedurally sound claims must be matched by robust, contemporaneous evidence from people who actually did the work.
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