AHK Recruitment Ltd. V Commissioner for HMRC


AHK Recruitment Ltd. had filed for an R&D tax credit for the 2014 and 2015 tax years. They provided a summary of projects undertaken and their technical uncertainties. The project related to the development of an “Individual Behaviour Assessment”. HMRC opened a review of the tax return as the project did not appear to meet the requirements of a hard science R&D project. Following this review, the claim was rejected, and AHK filed a Notice of Appeal.

Basic Facts

R&D tax credit claims must be rooted in hard sciences such as chemistry or computer sciences. It specifically excludes work in the arts, humanities, and social sciences from their definition of “science”.

The HMRC is able to conduct a check into a tax return pursuant to paragraph 24(1) of Schedule 18 to the FA 1998.

Court’s Decision

AHK and an HMRC officer engaged in a lengthy back and forth communication between March 2016 and October 2018. During this, the officer repeatedly requested more detailed information about the project, if a competent professional was involved in the project, detailed cost breakdowns and so on. AHK, who communicated through a financial services agent, repeatedly delayed deadlines and failed to provide sufficient information to the officer regarding validating that the project qualifies for the tax credit and that the costs claimed were accurate. The officer rejected the claim stating that there had not been any evidence by the company to suggest that they advanced the technological field of IT with their project.

AHK filed a Notice of Appeal. The court ruled that AHK failed to prove it undertook qualifying R&D. They went on to clarify that even if R&D had been undertaken, the taxpayer is required to provide sufficient evidence to back up its claims and costs related to R&D activities. Without this evidence, the appeal was dismissed and the R&D tax credit claim remained rejected.


The most important takeaway from this is the absolute importance of a robust R&D claim methodology. Outlining each component of the claim is vital to backing it up should it ever be questioned. The client is responsible for providing this comprehensive report and calculations and should seek expertise if they are in any doubt. 

Click here to read the full case.

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