R&D Tax Tribunal Cases: Hadee, Get Onbord, Quinn and Collins Construction

UK R&D tax relief appeals are heard by the First-tier Tribunal (Tax Chamber), which publishes its decisions on the BAILII database. Four decisions handed down between 2020 and 2024 now appear repeatedly in HMRC enquiry correspondence. Two ended with HMRC winning; two ended with the taxpayer winning. Understanding what each tribunal actually decided, rather than a secondhand summary, is the starting point for any informed response to an enquiry. If you are already in an HMRC R&D enquiry, read that guide first, then return here for the case law context.

For definitions of technical terms used throughout this page, the R&D tax glossary covers competent professional, scientific or technological uncertainty, subsidised expenditure, and the BIS Guidelines in plain English.

Case 1: Hadee Engineering Co Ltd v HMRC [2020] UKFTT 497 (TC)

Citation: [2020] UKFTT 497 (TC), TC07969. Decided 10 October 2020.
Outcome: HMRC won. The taxpayer's appeal was dismissed on almost all projects.
BAILII: bailii.org TC07969
Secondary source: Source Advisors case summary

Facts

Hadee Engineering Co Ltd was a Sheffield-based engineering firm that carried out design and manufacturing work for clients including Sheffield Forgemasters. The company claimed enhanced R&D relief under the SME scheme for seven projects across accounting periods ended 30 April 2009 and 30 April 2010, seeking additional Corporation Tax of approximately £85,000. The projects involved engineering and manufacturing work on components for client contracts. HMRC opened an enquiry and issued closure notices refusing the claims.

HMRC's argument

HMRC argued that Hadee had not demonstrated scientific or technological uncertainty for the projects claimed. The work was, in HMRC's view, the skilled application of existing engineering techniques rather than an advance in the overall knowledge or capability of the field. HMRC also raised concerns about the adequacy of the company's documentation, whether the correct costs had been apportioned to qualifying activities, whether the expenditure was subsidised because the work was carried out for paying clients, and whether subcontracted costs had been properly evidenced.

Hadee's argument

Hadee argued that its engineering team had faced genuine technical challenges in designing and manufacturing components to the required specifications, that the outcomes of individual projects were not predictable in advance, and that the work therefore involved scientific or technological uncertainty within the meaning of the BIS Guidelines on the Meaning of Research and Development for Tax Purposes (2004). The company's director, Mr Lowe, gave evidence about the technical content of each project.

Decision

The tribunal dismissed the appeal on almost all projects, allowing only the marine gears project to proceed to further consideration of quantum. On the rejected projects, the tribunal found that Mr Lowe's evidence was, in its own words, "unreliable, vague and at times inconsistent to the extent that we could not be satisfied on the material before us." The company had not established the existence of scientific or technological uncertainty at the start of each project. It had not maintained adequate project records or invoices that distinguished qualifying R&D activity from ordinary engineering delivery. The tribunal preferred HMRC's analysis on costs, subsidised expenditure, and apportionment.

Hadee appealed to the Upper Tribunal. That appeal was dismissed in March 2022: [2022] UKUT 84 (TCC).

Why HMRC cites this case in enquiries today

Hadee is the most frequently cited case in enquiry correspondence sent to engineering and manufacturing companies. HMRC uses it to make two points. First, that the competent professional test is objective: the question is not whether your engineers found the work difficult, but whether a competent professional in the relevant field would have been able to resolve the technical question without R&D. Second, that claims must be supported by project-level documentation created at the time, not reconstructed afterwards. If your claim is built on a high-level narrative prepared by someone with limited knowledge of the actual technical work, Hadee illustrates exactly how that fails at tribunal. The competent professional test guide covers what good technical evidence looks like in practice.

Case 2: Get Onbord Ltd (in liquidation) v HMRC [2024] UKFTT 617 (TC)

Citation: [2024] UKFTT 617 (TC), TC09238. Decided 9 July 2024.
Outcome: Taxpayer won. The appeal was allowed in full.
BAILII: bailii.org TC09238
Secondary source: ForrestBrown case analysis

Facts

Get Onbord Ltd developed ONBORD, an automated AI-enabled onboarding platform for businesses. The company claimed R&D tax credits for work that included the development of algorithms for data normalisation and data latency processes, a Know Your Customer (KYC) verification and risk-profiling AI analysis process, and associated testing procedures including false negative/positive identification and a novel "Uniquing" process. By the time the appeal reached the tribunal, the company was in liquidation. The claim had originally been prepared by a third-party R&D adviser that had since ceased trading. HMRC opposed the liquidator continuing the appeal, but the tribunal allowed it to proceed, recognising the director's principled position.

HMRC's argument

HMRC argued that the development work did not advance overall knowledge or capability in the relevant field and therefore did not qualify as R&D under section 1054 of the Corporation Tax Act 2009. HMRC's position was that Get Onbord had used existing processes and technologies, including open-source code, to build a new commercial product. Using existing tools or openly available code meant, in HMRC's view, that no technological advance had occurred. HMRC also argued that the company had not produced an adequately qualified competent professional to give evidence on the technical content of the work.

Get Onbord's argument

Get Onbord argued that its technical team had faced genuine uncertainty in developing the KYC and data normalisation processes, that the solutions created were not routine applications of existing technology, and that the algorithms developed constituted an appreciable improvement at the frontier of what was available. The company's witnesses gave evidence about the specific technical problems encountered and the experimental work carried out to resolve them.

Decision

The tribunal allowed the appeal in full. It found that HMRC had failed to produce any technical evidence to counter the company's case. The judgment set out several points that have since been widely cited. On open-source code: "the use of open-source code is not in itself an indication that a development is routine or readily discernible." On the competent professional test: the tribunal rejected HMRC's requirement for formal qualifications, finding that sufficient experience in the relevant area is enough. The judgment referenced the example that "a university drop-out, such as Sam Altman who founded OpenAI, could be considered competent." On the evidential burden: while the initial burden to prove R&D rests with the company, that burden can shift once the taxpayer has put forward sufficient evidence. At that point, "it was not enough for HMRC to criticise the lack of evidence" without putting forward technical evidence of its own.

Why this case matters for software and AI R&D claims

Get Onbord is a notable taxpayer win in a sector where HMRC has become increasingly sceptical. It establishes that building on open-source foundations does not automatically disqualify a claim, that HMRC cannot simply assert there is no R&D without providing technical evidence of its own once the taxpayer has made its case, and that experience rather than formal credentials can qualify someone as a competent professional. The case does not remove the burden on claimants to document the specific uncertainty and the experimental process. It does, however, indicate that tribunals will scrutinise HMRC's own evidence (or absence of it) as much as the taxpayer's. See also the software R&D guide for sector-specific context.

Case 3: Quinn (London) Limited v HMRC [2021] UKFTT 0437 (TC)

Citation: [2021] UKFTT 0437 (TC), TC08321. Decided 27 October 2021.
Outcome: Taxpayer won. Enhanced SME R&D relief of over £1 million was allowed.
BAILII: BAILII UKFTT/TC (search TC08321)
Secondary source: Stewarts case report

Facts

Quinn (London) Limited is a construction and refurbishment company. It carried out projects for clients that involved developing novel construction techniques and solutions. Quinn claimed enhanced R&D relief under the SME scheme for expenditure on work that generated new technological knowledge and capability which the company then used in future commercial projects. HMRC opened an enquiry and refused the claims, arguing that the expenditure was "subsidised" within the meaning of section 1138(1)(c) of the Corporation Tax Act 2009. The sum at stake was over £1 million.

HMRC's argument

HMRC argued that because Quinn's clients paid for the finished construction works, they indirectly met the R&D expenditure embedded in those works. Under section 1138(1)(c) CTA 2009, expenditure met directly or indirectly by another person is excluded from the enhanced SME relief calculation. HMRC's position was that the client contract payments covered the R&D costs as part of the overall contract price, making those costs subsidised and therefore ineligible for enhanced relief.

Quinn's argument

Quinn argued that its clients paid a fixed contract price for the completed construction works, not a reimbursement of specific R&D expenditure. The client contracts did not mention R&D, did not require Quinn to carry out R&D, and contained no mechanism by which the client was funding any particular cost line. Quinn bore the entire financial risk of the R&D activities independently. There was no clear link between what the client paid and what Quinn spent on R&D.

Decision

Tribunal Judge Harriet Morgan found in favour of Quinn. The judgment held that section 1138(1)(c) requires a "clear link" between the payment made by the third party and the specific R&D expenditure before that expenditure can be treated as subsidised. A standard commercial contract price for a finished product or service does not create that clear link, even if the overall price is sufficient to cover all of the supplier's costs including R&D. The tribunal also noted that denying relief in these circumstances would contradict the purpose of the SME R&D scheme, which is to incentivise companies to carry out R&D they would not otherwise undertake. Quinn was one of the first taxpayer victories on a substantive point of law in the R&D relief space and brought welcome clarity on a point HMRC had been using to challenge a wide range of claims.

Why HMRC and advisers both cite this case today

Quinn matters for any company that carries out R&D as part of work done under a customer contract. HMRC had been using the subsidised expenditure argument broadly against construction, engineering, software, and professional services firms. Quinn set a clear test: there must be a direct, identifiable link between the client's payment and the specific R&D cost for the exclusion to apply. If your client is paying for a finished deliverable under a fixed-price contract and has no awareness of or agreement to fund specific R&D activities, Quinn supports the position that your expenditure is not subsidised. The subsidised expenditure question is also addressed in the guide on contracted-out R&D and customer contract claims. For the enquiry process itself, see the nudge letter playbook.

Case 4: Collins Construction Ltd v HMRC [2024] UKFTT 951 (TC)

Citation: [2024] UKFTT 951 (TC), TC09332. Decided 21 October 2024.
Outcome: Taxpayer won. Both of HMRC's grounds were rejected; claims of over £3 million in tax were upheld.
BAILII: bailii.org TC09332
Secondary source: RPC case analysis

Facts

Collins Construction Ltd (CCL) is a specialist contractor that carries out refurbishment and fit-out projects including high-end commercial fit-outs, leisure developments, and medical refurbishments. Its clients typically provide concept designs and CCL prices the works, offering cost certainty before the project begins. CCL claimed R&D relief under the SME scheme for design and development activities it carried out in delivering bespoke construction projects. The company retained the intellectual property in the innovations it developed. HMRC opened an enquiry into two years of claims totalling over £3 million in tax and refused both years on two separate grounds.

HMRC's two arguments

HMRC argued, first, that the expenditure was subsidised under section 1138 CTA 2009 because CCL's clients paid for the finished works and therefore indirectly met the R&D costs within those works. Second, HMRC argued that the R&D had been "contracted out" to CCL by its clients under sections 1052 to 1053 CTA 2009, which would mean the clients (not CCL) were the party entitled to any R&D relief and CCL itself could not claim.

Collins Construction's argument

CCL argued that the client contracts were fixed-price agreements for specified finished construction works. No client contract mentioned R&D, required R&D to be carried out, or reimbursed any specific R&D cost. The prices were agreed before CCL knew what R&D activities, if any, would be required to deliver the works. CCL bore the full financial risk of those activities. On the contracted-out point, CCL argued that the clients had no knowledge of or control over the specific R&D activities and that HMRC's broad reading of the contracted-out provisions was not supported by the legislation.

Decision

The tribunal found in Collins Construction's favour on both points. On subsidised expenditure, the judge expressly followed Quinn, finding "no reason to diverge" from that decision and confirming that a clear link between the client payment and the specific R&D expenditure is required before the subsidy exclusion can apply. On contracted-out R&D, the tribunal rejected HMRC's broad interpretation, holding that the contractual arrangement between CCL and its clients did not constitute the clients contracting out R&D to CCL.

Collins Construction is also notable for the period it covers. The claim years pre-date the merged R&D scheme introduced for accounting periods beginning on or after 1 April 2024. The merged scheme changes the contracted-out rules: relief under the merged scheme generally follows the entity that makes the key decisions about the R&D and bears the related financial risk, rather than the entity that physically carries out the work. Whether Collins principles apply directly to merged-scheme claims will depend on the specific facts and specialist advice is needed.

Why this case is important for contractors and service businesses

Collins Construction, decided just three years after Quinn, confirms that Quinn was not an outlier. Across both decisions, the tribunal has consistently rejected HMRC's attempts to deny relief to companies that carry out genuine R&D as part of services delivered under ordinary commercial contracts. The cases together establish that a fixed-price contract for a finished deliverable is not a subsidy of the R&D embedded in producing that deliverable, absent a clear link between the payment and the specific R&D cost. If HMRC has challenged your claim on subsidised-expenditure or contracted-out grounds, Quinn and Collins are the two cases your adviser should be citing in response. Review the full enquiry timeline to understand at what stage you can introduce case law arguments.

Patterns Across These Four Cases

Reading the four decisions together, five recurring patterns emerge that are directly relevant to any R&D claim in 2026.

1. The advance must be measured against a defined baseline

In Hadee, the company could not articulate what was already known in the relevant field before the R&D work started. The BIS Guidelines require an advance in the overall knowledge or capability of the field, which presupposes a clear statement of where the current frontier sat at project start. HMRC's approach in Hadee and subsequent cases is to ask: what did you know going in, what did you not know, and why could a competent professional not have answered the question without R&D? A claim that describes the work without addressing those three questions is exposed.

2. The competent professional test is objective, not personal

The test asks what a hypothetical competent professional in the relevant field could have deduced, not whether the claimant's own team found the work difficult. In Hadee, the company's engineers were clearly skilled, but that fact did not help. Get Onbord usefully clarified that the competent professional does not need formal qualifications: sufficient experience in the relevant area is enough. Neither case changed the core principle that difficulty and novelty are not the same thing. The competent professional guide covers what this means in practice for different sectors.

3. HMRC cannot simply assert there is no R&D

Get Onbord established that once a taxpayer puts forward substantive evidence in support of its claim, the evidential burden shifts. HMRC cannot dismiss a claim by criticising the absence of evidence without putting forward technical evidence of its own. In practice, this means that a well-documented claim with a credible technical narrative from someone who actually worked on the projects places HMRC in a difficult position at tribunal.

4. Contemporaneous records are decisive

Hadee failed partly because its records were inadequate. The tribunal could not verify which costs related to which projects or how much time had been spent on qualifying activities. HMRC's guidance on the Additional Information Form makes clear that contemporaneous records reduce enquiry risk. Project logs, experiment notes, technical meeting records, and time-coded staff records created during the R&D work carry more weight than anything produced retrospectively. Retrospective narratives, particularly those prepared by third parties with no direct involvement in the technical work, are the single largest enquiry trigger.

5. Standard contract prices are not subsidies of embedded R&D costs

Quinn and Collins Construction together resolve what had been an area of genuine uncertainty. A fixed-price contract for a finished deliverable does not make the R&D costs inside that deliverable subsidised, unless there is a clear, identifiable link between the specific payment and the specific R&D expenditure. This applies across sectors: construction, engineering, software, and professional services companies that carry out R&D as part of work they deliver under commercial contracts are protected by these decisions, provided no such clear link exists in their contracts.

6. Qualifying R&D ends when the uncertainty resolves

Multiple cases, including those beyond this page, confirm that R&D ends at the point the scientific or technological uncertainty is resolved. Work carried out after that point, including commercial integration, production scaling, testing that a solution works in live conditions, and bug-fixing, does not qualify even if it arises from the same project. The CIRD manual at CIRD81900 covers the project boundary in detail. Claims that draw the qualifying period too broadly by including post-resolution work are at high risk of partial disallowance. See the full qualifying expenditure guide for how the eight cost categories interact with this boundary.