Recent First-tier Tribunal Decision on R&D Tax Relief
In early 2026, the UK First-tier Tax Tribunal (FTT) delivered its decision in M&C Educational Training Services Ltd v HMRC, a case that provides further clarification on the scope of the UK’s R&D tax relief regime. While the outcome was consistent with existing case law, the decision is noteworthy for the clarity with which it distinguishes between scientific or technological advancement and innovation in education or training.
M&C Educational Training Services Ltd was established to provide specialist training in metallurgy after the closure of a university materials science department. The company developed and delivered a suite of metallurgy courses aimed at addressing a perceived skills gap within industry. These courses incorporated digital learning platforms, educational materials, and practical laboratory-based instruction. M&C argued that the development of these courses involved significant technical effort and innovation and that, taken as a whole, the work amounted to qualifying research and development for tax purposes.
For the accounting periods ending 31 July 2020 and 31 July 2021, M&C submitted claims for R&D tax relief. HMRC opened a compliance check and ultimately rejected the claims, concluding that the company’s activities did not fall within the statutory definition of R&D. In HMRC’s view, the work was fundamentally educational in nature and did not seek to achieve an advance in science or technology. M&C appealed that decision to the First-tier Tribunal, arguing that HMRC had taken an overly narrow view of what constituted an advance and had failed to appreciate the technical sophistication of the work undertaken.
The appeal therefore required the Tribunal to consider, in detail, whether the development of technical training materials and courses, in a scientific discipline, could meet the legislative test for R&D tax relief.
The Tribunal’s Reasoning and Decision
In dismissing the appeal, the Tribunal focused closely on the statutory definition of R&D and the accompanying BEIS (now DSIT) Guidelines. Central to its reasoning was the requirement that qualifying activities must seek to achieve an advance in overall scientific or technological knowledge or capability, and that this advance must arise through the resolution of scientific or technological uncertainty. The Tribunal emphasised that both elements must be present and that the test is an objective one, judged by reference to what a competent professional in the field could readily resolve using existing knowledge.
Although the Tribunal accepted that metallurgy is clearly a field of science and technology, it found that M&C’s activities were not directed at advancing metallurgy as a scientific discipline. Instead, they were directed at teaching and disseminating existing metallurgical knowledge. The Tribunal acknowledged that the courses may have been well designed, technically detailed, and valuable to industry, but it concluded that their purpose was to convey knowledge that was already known and publicly available, rather than to generate new scientific understanding or capability.
A significant part of the Tribunal’s analysis concerned the nature of the uncertainties encountered by M&C. The company pointed to difficulties in structuring course content, selecting appropriate teaching methodologies, and developing digital learning materials capable of explaining complex metallurgical concepts. While the Tribunal accepted that these challenges required skill and judgement to overcome, it held that they were not scientific or technological uncertainties within the meaning of the legislation. Rather, they were uncertainties about pedagogy, presentation, and course design. The fact that the subject matter itself was scientific did not convert educational uncertainties into qualifying R&D uncertainties.
The Tribunal also rejected the argument that the absence of comparable courses in the UK market demonstrated an advance in science or technology. It reiterated that novelty or innovation in a commercial or educational sense is not sufficient for R&D tax purposes. An activity may be new, distinctive, or commercially valuable without advancing the underlying science or technology. The Tribunal stressed that the relevant comparison is not with what is available in the market, but with the existing state of scientific or technological knowledge.
Ultimately, the Tribunal concluded that M&C’s work amounted to the application and communication of existing scientific knowledge rather than an attempt to extend that knowledge. As such, it fell outside the scope of qualifying R&D for tax purposes. HMRC’s decision to deny the claims was upheld, and the appeal was dismissed in full.
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