Tanglewood Care Services Limited v The Commissioners for HMRC [2026] UKFTT 1137 (TC)

[2026] UKFTT 01137 (TC)Case No TC 09978
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 29 July 2026Date Judgment date: 06 August 2026
By remote video hearing
Appeal reference: TC/2024/03731
CORPORATION TAX – research and development – whether the tests in the BEIS Guidelines had been met – appeal dismissed
Before
TRIBUNAL JUDGE STAPENHURSTMR JULIAN SIMS
Between
TANGLEWOOD CARE SERVICES LIMITEDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Perry Lewis, of Aspen Waite Accountants for AppellantMr Liam Ellis, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]This is an appeal by Tanglewood Care Services Limited ("the Appellant") against HMRC's decision to issue a Closure Notice under paragraph 32(1A) Schedule 18 Finance Act 1998 in relation to the accounting period ended 31 January 2021. The Closure Notice removed the Appellant's claim for enhanced research and development (“R&D”) expenditure of £880,286 and amended its corporation tax liability accordingly.[2]The parties agree that the principal issue is whether the activities relied upon by the Appellant constituted research and development for the purposes of Part 13 CTA 2009 and the BEIS Guidelines.[3]If that issue is determined in the Appellant's favour, a further question may arise as to the amount of expenditure properly attributable to qualifying activities.

Background

[4]The Appellant was incorporated on 2 June 2015 and operates residential nursing care facilities.[5]On 28 February 2022 the Appellant filed its corporation tax return for the accounting period ended 31 January 2021. No claim for enhanced R&D expenditure was made at that time.[6]On 9 September 2022 the Appellant submitted an amended return claiming enhanced R&D expenditure of £880,286. The claim related to a single project entitled "Managing outbreak & effects of a Global Pandemic in a residential care home (Covid-19)".[7]The Appellant's case is that the project sought to develop and optimise a combination of measures designed to manage the effects of Covid-19 in the care home environment and to limit transmission whilst maintaining the wellbeing of residents and staff.[8]The project was said to involve uncertainties including:(1) how the disease could be managed and controlled within care homes;(2) how contagious asymptomatic individuals were;(3) the effect of control measures upon residents and staff;(4) the optimal combination, frequency and interaction of preventative measures;(5) infection-control procedures, visitor restrictions, staffing arrangements and environmental changes.[9]The Appellant contends that the project involved developing a novel system comprising numerous measures including extensive PPE use, testing regimes, visitor restrictions, cohorting of residents, enhanced cleaning procedures, social distancing arrangements, staff segregation, track and trace systems and vaccination programmes.[10]HMRC contend that the Appellant was applying existing scientific knowledge regarding infection control and virus transmission to its own operational circumstances and was not undertaking activities that sought an advance in science or technology.

Legislation

[11]We set out below the provisions relevant to the issue in this appeal.[12]The Appellant is a Small or Medium-sized Enterprise (“SME”). The tax reliefs for R&D expenditure incurred by such companies are contained within Chapter 2, Part 13 CTA 2009.[13]Within Part 13 CTA 2009, section 1039 provides for relief in respect of qualifying expenditure on in-house direct R&D and contracted-out R&D incurred by an SME. It also provides for the payment of R&D tax credits in certain circumstances.[14]Under section 1044 CTA 2009, a company is entitled to relief if it satisfies the statutory conditions for relief, including Condition D, which requires the company to have "qualifying Chapter 2 expenditure".[15]HMRC does not dispute that the Appellant satisfies the other relevant conditions. The issue is whether Condition D is met.[16]Section 1051 provides that "qualifying Chapter 2 expenditure" means a company's qualifying expenditure on in-house direct R&D and contracted-out R&D[17]Section 1052 CTA 2009 provides that expenditure on in-house direct R&D is qualifying expenditure only if a number of statutory conditions are met, including a requirement that the expenditure be attributable to relevant research and development undertaken by the company itself. Similar requirements apply to expenditure on contracted-out R&D under section 1053 CTA 2009. HMRC's case is that neither the in-house expenditure nor the contracted-out expenditure was attributable to relevant R&D.[18]For the purposes of sections 1052 and 1053 CTA 2009, the meaning of "research and development" is ultimately determined by section 1138 CTA 2010. Section 1138 provides that activities are to be treated as research and development if they constitute research and development for the purposes of section 1006 ITA 2007.[19]Section 1006(3) allows for the Treasury to make regulations to specify what is and is not to be treated as R&D for the purposes of that section. The relevant regulations are the Research and Development (Prescribed Activities) Regulations 2004 (SI 2004/712).[20]Regulation 2 provides that activities are, or are not, research and development according to whether they fall within the Guidelines on the Meaning of Research and Development for Tax Purposes issued by the Secretary of State for Trade and Industry (the “Guidelines”).[21]The Guidelines were originally issued on 5 March 2004 and were revised on 6 December 2010. References in this decision to the Guidelines are to that revised version, which applies to the accounting period under appeal. Further revisions have since been introduced, but those apply only to accounting periods beginning on or after 1 April 2024 (subject to transitional provisions).[22]Accordingly, the principal issue in this appeal is whether the activities relied upon by the Appellant constitute R&D within the meaning of the Guidelines as then in force. The passages of the Guidelines most relevant to that issue are set out below.

The Guidelines

[23]The parties agreed that the appeal falls to be determined by reference to the Guidelines. The principal provisions relevant to this appeal concern:(i) the requirement for an advance in science or technology;(ii) scientific or technological uncertainty;(iii) system uncertainty; and(iv) the role of the competent professional.[24]The parties disagree as to the relationship between paragraphs 6 and 9 of the Guidelines and, in particular, whether paragraph 9 identifies a route to R&D distinct from the requirement for an advance in overall knowledge or capability. We address that issue below.

Advance in science or technology

[25]Paragraph 3 provides that:
“R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology.”
[26]A project for the purpose of paragraph 3 is defined at paragraph 19 as:
“a number of activities conducted to a method or plan in order to achieve an advance in science or technology... It should encompass all the activities that collectively serve to resolve the scientific or technological uncertainty associated with achieving the advance.”
[27]Paragraph 6 provides that an advance in science or technology means:
“an advance in overall knowledge or capability in a field of science or technology (not a company’s own state of knowledge or capability alone). This includes the adaptation of knowledge or capability from another field of science or technology in order to make such an advance where this adaptation was not readily deducible.”
[28]Paragraph 20 explains that "overall knowledge or capability" means:
"the knowledge or capability in the field which is publicly available or is readily deducible from the publicly available knowledge or capability by a competent professional working in the field."
[29]Paragraph 9 identifies examples of projects which may constitute R&D.

(c) , which includes projects seeking to:

“ make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes.”
[30]Paragraph 23 explains that an appreciable improvement must amount to a “genuine and non-trivial improvement” which would generally be acknowledged by a competent professional working in the field.[31]Paragraph 24 makes clear that merely deploying existing science or technology in a new context with only minor or routine changes will not amount to an appreciable improvement.[32]Paragraph 22 further provides that:
“the routine analysis, copying or adaptation of an existing process, material, device, product or service will not advance overall knowledge or capability, even though it may be completely new to the company or the company’s trade”
.

Science

[33]Paragraph 15 of the Guidelines provides:
"Science is the systematic study of the nature and behaviour of the physical and material universe. Work in the arts, humanities and social sciences, including economics, is not science for the purpose of these Guidelines. Mathematical techniques are frequently used in science, but mathematical advances in and of themselves are not science unless they are advances in representing the nature and behaviour of the physical and material universe."
[34]Paragraph 15 is relevant in identifying the distinction drawn by the Guidelines between activities directed at advancing science and activities concerned with matters falling outside science, including work in the social sciences.

Scientific or technological uncertainty

[35]Paragraph 4 provides that: “the activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D”.[36]Paragraph 13 states: "Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.This includes system uncertainty. Scientific or technological uncertainty will often arise from turning something that has already been established as scientifically feasible into a cost-effective, reliable and reproducible process, material, device, product or service.”[37]Paragraph 14 provides:
“Uncertainties that can readily be resolved by a competent professional working in the field are not scientific or technological uncertainties. Similarly, improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty.”

System uncertainty

[38]The Appellant placed particular reliance on the provisions dealing with system uncertainty.[39]Paragraph 13 states that scientific or technological uncertainty includes "system uncertainty". Paragraphs 29 and 30 explain that such uncertainty may arise from the complexity of a system rather than uncertainty about the behaviour of individual components.[40]Paragraph 29 states:
"System uncertainty is scientific or technological uncertainty that results from the complexity of a system rather than uncertainty about how its individual components behave."
[41]Paragraph 30 continues:
"There will be scientific or technological uncertainty if a competent professional working in the field cannot readily deduce how the separate components or sub-systems should be combined to have the intended function."
[42]However, paragraph 29 also states that:
"assembling a number of components (or software sub-programs) to an established pattern, or following routine methods for doing so, involves little or no scientific or technological uncertainty."

Competent professional

[43]The concept of the competent professional appears throughout the Guidelines and is relevant to both advance and uncertainty.[44]The term is not expressly defined. In Flame Tree Publishing Ltd v HMRC [2024] UKFTT 349 (TC) (“Flame Tree Publishing”) the Tribunal described the expression as “self-explanatory”, whilst observing that it requires more than an intelligent interest in the relevant field. A competent professional would ordinarily be expected to possess appropriate qualifications, experience and current knowledge of the relevant scientific or technological principles. Witness evidence and submissions Witness Evidence

Witness evidence and submissions

[45]The Appellant relied upon evidence from Michael Whitehead, Karen Whitehead and Wendy Trotter.[46]Mr Whitehead is the founder and director of the Appellant and has extensive experience in the management and operation of care homes. He described the unprecedented challenges presented by the emergence of Covid-19 and explained that the Appellant sought to identify and implement measures capable of reducing transmission within its homes whilst maintaining resident welfare and continuity of care. Decisions were made collectively by a management team that included senior operational staff and nursing personnel.[47]Mr Whitehead explained that the Appellant introduced and continually reviewed a wide range of measures, including visitor restrictions, isolation arrangements, cohorting, PPE requirements, testing regimes, reporting systems and changes to the physical operation of its homes. He described a process of regular management meetings, daily reporting and ongoing review of information gathered from individual homes. Measures were frequently revised in response to operational experience and evolving circumstances.[48]Mr Whitehead accepted that no formal project plan was prepared and that many decisions were recorded informally. He also accepted that he had no qualifications or expertise in epidemiology, virology or infectious disease transmission, describing his expertise as lying in the management and operation of care homes.[49]Whilst accepting that existing infection-control guidance addressed matters such as hygiene, cleaning, PPE and isolation procedures, Mr Whitehead considered that the Appellant developed additional measures which went beyond that guidance, including visitor arrangements, zoning, movement controls and cohorting strategies. He stated that the Appellant relied heavily upon information generated within its own homes and continually reviewed infection data and operational outcomes. He maintained that the activities ultimately amounted to research and development, although he accepted that their primary objective at the time was to protect residents and staff rather than to pursue research.[50]Ms Karen Whitehead, the Appellant's Director of Estates and Development, described the practical and operational challenges faced by the Appellant during the pandemic. She explained that management implemented numerous measures intended to protect residents and staff, including restrictions on visitors, physical adaptations to the homes, additional handwashing facilities and dedicated visitation suites designed to mitigate the effects of prolonged isolation on residents.[51]Ms Whitehead stated that decisions were frequently taken in rapidly changing circumstances and under considerable time pressure. She described a continuing process of meetings, information sharing and operational review. She accepted that she was not a healthcare professional and held no qualifications in medicine, epidemiology or infectious diseases. Although she was unable to comment in detail on the infection-control guidance relied upon by HMRC, she considered that further measures were required beyond the guidance available at the time.[52]Ms Whitehead further explained that decisions regarding estate adaptations and visitor arrangements were informed by management discussions, operational reporting and feedback from residents, relatives and staff. She emphasised that decision-making formed part of a coordinated response involving senior management and clinically trained personnel and that operators were frequently required to act in circumstances where guidance did not provide clear answers.[53]Ms Wendy Trotter held a senior administrative and support role and was responsible for procurement and reporting processes during the relevant period. She explained that information was collected daily from the Appellant's homes and used to inform operational decisions, including the allocation of PPE and other resources. She confirmed in cross-examination that she was not involved in the substantive management discussions and was unable to assist as to the detail of decisions taken at those meetings.[54]We found all three witnesses to be honest and conscientious witnesses who sought to assist the Tribunal. Their evidence demonstrated the significant operational challenges faced by the Appellant and the extensive efforts undertaken to protect residents and staff during the pandemic. However, none claimed expertise in any relevant field of science or technology and their evidence was directed principally to the operation and management of care homes rather than to the advancement of scientific or technological knowledge or capability.

Appellant’s submissions

[55]The Appellant submitted that the activities undertaken during the accounting period constituted qualifying research and development within the meaning of Part 13 CTA 2009 and the Guidelines.[56]Mr Lewis submitted that the Covid-19 pandemic presented unprecedented challenges for care-home operators and that existing infection-control procedures were insufficient to address issues including asymptomatic transmission, prolonged infectious periods, the vulnerability of elderly residents and the practical difficulties of controlling infection within residential care settings.[57]The Appellant's case was that HMRC had incorrectly analysed the project by considering individual measures in isolation. The project should instead be viewed as a whole, in accordance with paragraph 19 of the Guidelines. The alleged advance lay not in any individual intervention but in the development, integration, evaluation and optimisation of a system comprising multiple interacting measures, including testing regimes, visitor controls, resident cohorting, PPE requirements, cleaning protocols, staff segregation, admissions controls and reporting systems.[58]In particular, the Appellant relied upon the concept of system uncertainty in paragraphs 29 and 30 of the Guidelines. It submitted that the relevant uncertainties concerned how known measures should be combined, deployed and refined within a care-home environment to achieve the intended outcome. The fact that the individual components were known did not preclude the existence of qualifying uncertainty.[59]Mr Lewis further submitted that paragraph 6 of the Guidelines refers to advances in capability as well as advances in knowledge. The Appellant was therefore not required to demonstrate an advance in scientific understanding of Covid-19 itself. Rather, it sought to achieve an improved capability for controlling and managing infection within residential care settings.[60]The Appellant argued that the relevant uncertainties were scientific or technological in nature and included issues relating to asymptomatic transmission, the effectiveness of infection-control measures, testing frequency, visitor management, staff segregation and the interaction between multiple control measures. Those uncertainties were said to have been addressed through a structured process of implementation, monitoring, review and refinement, evidenced by daily reporting systems, management meetings, infection data and the continual revision of procedures. Mr Lewis submitted that qualifying R&D did not require laboratory-based experimentation or controlled scientific testing.[61]The Appellant further submitted that HMRC had placed undue emphasis upon the Appellant's motivation for undertaking the activities and had applied hindsight. The relevant question was whether the project sought to achieve an advance in science or technology through the resolution of scientific or technological uncertainty, assessed by reference to the state of knowledge at the time. Mr Lewis relied upon the evolving Government guidance issued during 2020 as demonstrating that neither Government nor the wider scientific community possessed settled answers to many of the issues confronting care-home operators during the relevant period.[62]The Appellant also submitted that paragraph 22 of the Guidelines was inapplicable because the project did not involve the routine copying or adaptation of existing procedures. Existing infection-control practices had proved inadequate to address Covid-19 and the Appellant was required to develop and refine a new approach tailored to the circumstances of its care homes. It further relied upon paragraph 9(c), arguing that the project sought to achieve an appreciable improvement to infection-control practices through scientific or technological changes.[63]On the issue of the competent professional, Mr Lewis submitted that the relevant field was the application of infection-control techniques within residential care environments. The relevant competent professionals were therefore experienced care-home operators and nursing professionals working within that field rather than specialist virologists or epidemiologists.[64]Finally, the Appellant submitted that authorities such as Flame Tree Publishing, AHK Recruitment Ltd v HMRC [2020] UKFTT 232 (TC) (“AHK Recruitment”) and Hadee Engineering Co Ltd v HMRC [2020] UKFTT 497 (TC) (“Hadee Engineering”) were distinguishable on their facts. It contended that the evidence before the Tribunal demonstrated a structured programme directed at resolving scientific or technological uncertainties through the development and refinement of an integrated system for managing Covid-19. The appeal should therefore be allowed.

HMRC’s submissions

[65]HMRC submitted that the Appellant had failed to establish that the activities relied upon constituted research and development within the meaning of the legislation and the Guidelines. The Closure Notice should therefore be upheld.[66]Mr Ellis submitted that the burden of proof rested upon the Appellant. It was required to identify the relevant field of science or technology, establish the baseline of overall knowledge or capability within that field, demonstrate the existence of scientific or technological uncertainty and show that the project sought to achieve an advance beyond that baseline.[67]HMRC's case was that the Appellant had failed to establish:(i) the existence of a qualifying project within paragraph 19 of the Guidelines;(ii) a relevant field of science or technology; and(iii) that its activities sought to achieve an advance in science or technology through the resolution of scientific or technological uncertainty.

Project

[68]Mr Ellis submitted that paragraph 19 requires activities to be conducted to a method or plan in order to achieve an advance in science or technology. He argued that the evidence demonstrated an operational response to rapidly changing circumstances rather than a planned programme directed at resolving scientific or technological uncertainty. In particular, the Appellant's witnesses accepted that no formal project plan existed, that decisions were frequently taken informally, and that measures were continually adapted in response to events as they unfolded.[69]HMRC further submitted that the R&D report was prepared after the accounting period and did not identify the relevant baseline knowledge, the uncertainties to be resolved, any methodology for resolving them, or criteria by which success could be assessed.

Relevant field and competent professional

[70]HMRC submitted that the management and operation of a care home is not itself a field of science or technology, even though it may involve the application of scientific knowledge. Although the Appellant identified the relevant field as infection control within a care-home setting, it had produced no evidence from a person possessing expertise in any relevant scientific or technological discipline.[71]Mr Ellis submitted that none of the Appellant's witnesses possessed expertise in epidemiology, virology, infection science or any comparable discipline and that, consistently with Flame Tree Publishing, the absence of evidence from a competent professional left the Tribunal without evidence as to the state of overall knowledge or capability in the relevant field or whether the alleged uncertainties were readily deducible.

Advance and uncertainty

[72]HMRC submitted that the Appellant had failed to establish any advance in overall knowledge or capability in a field of science or technology. The measures relied upon, including hygiene procedures, visitor restrictions, isolation arrangements, testing procedures, PPE requirements and social-distancing measures, were either already known or readily deducible responses to the pandemic. The Appellant was applying existing scientific knowledge within its own operational environment rather than advancing science or technology. Implementing measures which went beyond existing guidance did not, of itself, amount to an advance in science or technology, nor had the Appellant demonstrated how the interaction of those measures advanced overall knowledge or capability beyond its own organisation.[73]HMRC further submitted that the alleged uncertainties were not scientific or technological uncertainties within the meaning of the Guidelines. Many concerned operational matters such as staffing, visitor arrangements, admissions, procurement and resident welfare. To the extent that uncertainties existed regarding transmission, infection pathways or disease control, those were being investigated by scientists and public-health authorities, whilst the Appellant was responding to evolving scientific knowledge rather than seeking to generate or resolve it.[74]Accordingly, HMRC submitted that the Appellant had failed to establish a qualifying project, an advance in science or technology, relevant scientific or technological uncertainty, or evidence from a competent professional. The appeal should therefore be dismissed.

Findings of fact

[75]The Appellant operated seven residential care homes during the relevant period. Its residents were predominantly elderly and many were particularly vulnerable to the effects of Covid-19.[76]The Covid-19 pandemic presented significant and unprecedented challenges for the Appellant. During much of the relevant period both scientific understanding of Covid-19 and Government guidance relevant to care homes continued to evolve.[77]In response, the Appellant implemented a wide range of measures intended to reduce transmission and protect residents and staff. These included PPE requirements, visitor restrictions, testing arrangements, isolation procedures, cohorting of residents, staff segregation, enhanced cleaning protocols and revised admissions procedures.[78]The Appellant established systems for gathering and reviewing information from its care homes, including daily reporting and regular management meetings. Measures were continually reviewed and adapted in light of operational experience, available guidance and information gathered from the homes.[79]No formal written project plan was prepared. Decisions were made through ongoing management discussions and were modified as circumstances developed during the pandemic.[80]Some measures adopted by the Appellant were introduced before similar approaches appeared in later Government guidance, demonstrating a proactive response to the challenges presented by the pandemic.[81]The Appellant maintained management, governance and reporting systems to monitor infections, resident welfare, staffing levels and compliance issues, and to inform operational decision-making.[82]The Appellant's objective was to develop and implement a system of infection-control and operational procedures intended to minimise the transmission and effects of Covid-19 within its care homes whilst maintaining resident welfare and continuity of care.[83]The principal individuals responsible for developing and implementing those measures were experienced care-home operators, managers and support staff. Although the management team included individuals with nursing qualifications and clinical experience, the expertise of the witnesses before the Tribunal lay primarily in the management and operation of residential care facilities rather than in any scientific or technological discipline. Discussion The Project

Discussion

[84]We begin with the question whether the Appellant has established the existence of a "project" within the meaning of paragraph 19 of the Guidelines. Paragraph 19 defines a project as a number of activities conducted to a method or plan in order to achieve an advance in science or technology and encompassing those activities directed at resolving the relevant scientific or technological uncertainty.[85]HMRC submitted that there was no identifiable project and that the evidence instead demonstrated a series of reactions to rapidly changing circumstances. The Appellant submitted that there was a coherent project directed towards developing a system for managing the effects of Covid-19 within its care homes.[86]We accept that the Appellant's activities exhibited a significant degree of organisation and structure. The evidence demonstrated regular management meetings, the collection and review of operational data, ongoing monitoring of Covid-19 cases, and the continual modification of infection-control procedures in response to changing circumstances.[87]Although no formal project plan existed and many decisions were taken incrementally as circumstances evolved, we do not consider paragraph 19 requires a formally documented plan. Taken as a whole, the evidence demonstrates a coordinated programme of activity involving information gathering, review and implementation directed towards a defined objective. Unlike the position in Hadee Engineering, we are therefore satisfied that the activities constituted a project within paragraph 19 of the Guidelines.[88]We accept that the objective of that project was to minimise the transmission and effects of Covid-19 within the Appellant's care homes whilst maintaining resident welfare and continuity of care.[89]However, the existence of a project is not itself sufficient to establish entitlement to relief. The project must seek to achieve an advance in science or technology by resolving scientific or technological uncertainty. It is therefore necessary to consider the nature of the alleged advance and uncertainties relied upon by the Appellant.

Advance in Science or Technology

[90]Paragraph 3 of the Guidelines provides that R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology.[91]Paragraph 6 defines such an advance as an advance in overall knowledge or capability in a field of science or technology rather than in a company's own knowledge or capability alone. Paragraph 9 then provides examples of projects which may amount to an advance in science or technology, including projects seeking to make an appreciable improvement to an existing process, material, device, product or service through scientific or technological changes.[92]Before considering the facts, it is necessary to address a point of interpretation raised by HMRC. HMRC submitted that paragraph 9 must be read in the context of paragraph 6 and that an appreciable improvement within paragraph 9(c) is not sufficient unless it reflects an advance in overall knowledge or capability in the relevant field rather than merely an improvement in the Appellant's own operations. HMRC further submitted that this required advancement of the underlying science or technology.[93]We accept the first part of that submission. Paragraph 9 cannot be read in isolation. The examples given in that paragraph are examples of projects which may satisfy the definition of an advance in science or technology in paragraph 6. It follows that a product, process or service does not qualify merely because it exhibits some improved functionality. This approach is consistent with the observation of Briggs J in Gripple Ltd v HMRC [2010] EWHC 1609 (Ch) at [12] that the R&D provisions constitute a detailed and prescriptive code, requiring the decision-maker to apply the individual conditions contained in the legislation and Guidelines.[94]We do not, however, accept that paragraph 6 requires a claimant in every case to demonstrate an advance in underlying scientific or technological knowledge. Paragraph 6 refers to an advance in overall knowledge or capability, and paragraph 13 expressly contemplates uncertainty arising from turning something already known to be scientifically feasible into a cost-effective, reliable and reproducible process, product or service. Paragraphs 29 and 30 also recognise that uncertainty may arise from the interaction or integration of known processes, technologies or components. The Guidelines therefore recognise that advances may arise through the resolution of uncertainty affecting capability as well as knowledge, and that a project is not excluded from consideration merely because its individual components are already known.[95]We therefore proceed on the basis that the relevant question is whether the project sought to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty.[96]The Appellant submitted that the advance lay in the development of an integrated system for managing Covid-19 in residential care settings. It argued that the novelty lay not in any individual measure but in the manner in which numerous measures were combined, assessed and refined.[97]We accept that the Appellant introduced and refined a substantial number of measures during the relevant period. These included testing procedures, visitor restrictions, isolation arrangements, cohorting of residents, enhanced cleaning regimes, PPE requirements, staffing arrangements and systems for monitoring residents and staff. The Appellant continuously reviewed those measures as circumstances changed.[98]We do not accept HMRC's submission insofar as it suggests that the claim must fail simply because the individual measures relied upon by the Appellant were already known. Nor do we consider that the Appellant was required to demonstrate that it was seeking to advance scientific understanding of the Covid-19 virus itself. In principle, a project may satisfy the Guidelines without generating new scientific knowledge if it seeks to achieve an advance in overall capability through the resolution of genuine scientific or technological uncertainty.[99]The difficulty for the Appellant is that the evidence does not establish that the project sought to achieve an advance in overall knowledge or capability in a field of science or technology. The objective was to determine how best to deploy, balance and manage infection-control measures within the Appellant's own care homes so as to protect residents and maintain continuity of care. Although that involved the adaptation and refinement of numerous measures, the evidence does not show that those activities were directed towards achieving an advance in overall knowledge or capability beyond the Appellant's own operations. Rather, they were directed towards the practical management of an unprecedented operational challenge.[100]We therefore conclude that the Appellant has not established that the project sought an advance in science or technology within the meaning of paragraphs 3 and 6 of the Guidelines.

Scientific or Technological Uncertainty

[101]Paragraph 13 of the Guidelines provides that scientific or technological uncertainty exists where knowledge of whether something is scientifically possible or technologically feasible, or of how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.[102]The Appellant relied upon a number of alleged uncertainties including the transmissibility of Covid-19, the significance of asymptomatic infection, the effectiveness of particular control measures, the interaction of multiple interventions and the effect of those interventions upon residents and staff.[103]We accept that the relevant period was characterised by considerable uncertainty. Covid-19 was a novel disease, scientific understanding evolved rapidly and public-health guidance changed over time. Care-home operators were therefore required to make difficult decisions in circumstances where complete information was unavailable. We also accept Mr Lewis's submission that the evolution of Government guidance during 2020 demonstrates that scientific understanding of Covid-19 and its management remained incomplete throughout much of the relevant period.[104]We further accept that the Guidelines are broad enough to encompass system uncertainty arising from the interaction of multiple measures within a system. A claimant is not confined to uncertainties concerning the behaviour of individual scientific or technological components and, in an appropriate case, uncertainty concerning how known measures should be combined to achieve a particular outcome may constitute scientific or technological uncertainty. We therefore reject any suggestion that the Appellant's case necessarily fails because it relied upon a combination of existing measures rather than the development of entirely new ones.[105]However, uncertainty within the wider scientific and public-health community does not of itself establish that the Appellant's activities were directed towards resolving scientific or technological uncertainty.[106]We are not satisfied on the evidence that the uncertainties relied upon by the Appellant were scientific or technological uncertainties of the type contemplated by paragraphs 13 and 14. Most concerned matters such as staffing arrangements, visitor policies, admissions, resident wellbeing, procurement of PPE, compliance procedures and the practical operation of care homes during a public-health emergency. Those were real and difficult problems, but they were predominantly operational and managerial in character.[107]We note paragraph 15 of the Guidelines, which makes clear that work in the social sciences is not science for the purposes of the Guidelines. The issues with which the Appellant was principally concerned were questions of organisation, management and the practical operation of residential care homes rather than questions directed at advancing science or technology.[108]Even where the Appellant identified uncertainties having a closer connection with infection control, the evidence does not show that it was undertaking activities directed at resolving scientific or technological uncertainty. Rather, the Appellant was seeking to determine how best to respond to evolving scientific knowledge, public-health advice and practical experience within its homes. That is not the same thing as resolving a scientific or technological uncertainty within the meaning of the Guidelines.[109]We therefore conclude that the Appellant has not established that its activities were directed towards resolving scientific or technological uncertainty.

Competent professional

[110]The concept of the competent professional appears throughout the Guidelines and is central to the assessment of both advance and uncertainty.[111]The Appellant relied principally upon the evidence of Mr Whitehead, Ms Whitehead and Ms Trotter. We found each of those witnesses to be honest, conscientious and experienced individuals with significant expertise in the care sector. Their evidence demonstrated substantial experience in the ownership, management and operation of care homes.[112]However, none of those witnesses claimed expertise in virology, epidemiology, infectious disease transmission, infection science or any other scientific or technological discipline capable of assisting the Tribunal as to the relevant state of knowledge or capability in the field. As the Tribunal observed in Flame Tree Publishing, the concept of a competent professional is central to assessing both the existence of relevant uncertainty and whether any advance has been achieved.[113]The absence of evidence from a person able to speak authoritatively to the relevant field is significant, although not because we consider the relevant field must necessarily have been virology or epidemiology. Rather, it leaves the Tribunal without sufficient evidence as to whether the alleged uncertainties were scientific or technological uncertainties, whether they were readily deducible by a competent professional, or whether the activities sought an advance in overall knowledge or capability beyond the Appellant's own operations.[114]Our conclusion is reinforced by the observations of Judge Bedenham in AHK Recruitment Ltd v HMRC [2020] UKFTT 232 (TC), where the Tribunal emphasised the importance of evidence from a competent professional or a person able to speak authoritatively as to the relevant field and the state of technological knowledge.

Activities Undertaken

[115]We accept that the activities undertaken by the Appellant were extensive and resource-intensive and were conducted as part of the project described above. However, the evidence did not establish that those activities involved a systematic process of investigation or experimentation directed towards resolving scientific or technological uncertainty. The Appellant's activities were largely responsive to the operational challenges created by the pandemic, with procedures being adapted as circumstances evolved. In our view, they were directed towards managing and mitigating the effects of Covid-19 within the Appellant's care homes rather than towards achieving an advance in science or technology.

Overall Assessment

[116]Having considered the evidence as a whole, we accept that the Appellant faced unprecedented challenges during the Covid-19 pandemic. We further accept that it responded in a diligent, innovative and proactive manner. The evidence demonstrates considerable effort, commitment and organisational skill on the part of the Appellant and its staff.[117]However, the statutory test is not whether the Appellant acted effectively, innovatively or successfully in managing its care homes during the pandemic. The question is whether the activities undertaken sought to achieve an advance in science or technology through the resolution of scientific or technological uncertainty.[118]The Appellant was engaged in developing and implementing an evolving package of measures intended to protect highly vulnerable residents during an unprecedented public-health emergency. Those measures were reviewed and refined over time and involved considerable judgement, ingenuity and commitment. We also accept that the Guidelines are capable, in principle, of extending to projects involving system uncertainty arising from the interaction of known measures and processes.[119]However, for the reasons set out above, the Appellant has not established that it was conducting a project directed at resolving scientific or technological uncertainty so as to achieve an advance in overall knowledge or capability in a field of science or technology. The evidence demonstrates operational decision-making, risk management and the adaptation of existing knowledge and guidance to the particular circumstances of the Appellant's care homes. It does not demonstrate research and development within the meaning of the Guidelines.[120]It follows that the activities relied upon by the Appellant do not constitute research and development for the purposes of Part 13 CTA 2009.[121]The appeal is dismissed.

Right to apply for permission to appeal

[122]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 06 August 2026