Tills Plus Limited v The Commissioners for HMRC
Decision date: 11 July 2024
Neutral citation: [2024] UKFTT 614 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Tills Plus appealed HMRC closure notices disallowing claimed enhanced R&D expenditure for years to 30 Nov 2018 and 2019. The Tribunal found Tills Plus did make a "payment" to its Iran-based subcontractor for statutory purposes but that the subcontracted work did not qualify as R&D; the closure notices disallowing the reliefs were upheld, and a paragraph 52 recovery assessment for previously paid sums was overturned on appeal. HMRC was permitted to rely at the hearing on the qualifying-R&D issue and no adjournment was required.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a company’s subcontractor invoice is discharged and replaced by the company assuming a loan obligation, the company has made a "payment" for the statutory subcontracted R&D payment condition—the critical question is whether the subcontractor’s obligation has been discharged at the cost or expense of the company, not physical movement from the company’s bank account. HMRC may advance new arguments at hearing to support the conclusions in a closure notice (as distinct from merely new reasoning) provided procedural fairness and case management justification are satisfied.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
Comments indicate that the commercial characteristics of a director/shareholder loan (e.g. interest-bearing or fixed term) do not by themselves determine whether a company has made a statutory "payment" absent sham; and that later expert reports inconsistent with contemporaneous descriptions of what was actually commissioned may be given reduced weight.