Last time, our R&D technical post looked at the contrast between innovation and uncertainty, and the pitfalls that companies can fall into when innovation is treated as the starting point for an R&D claim. If you need a refresher: We can sum up the article as “DON’T USE INNOVATION AS THE STARTING POINT FOR YOUR R&D CLAIM!”
As we outlined, it can be a common mistake; many claimants, and some advisors, begin by asking: what was new, difficult, valuable or commercially innovative? That’s not a terrible starter question if you have a client or a technical team that really struggles to see beyond the commercial aspects for their projects, but it isn’t an ideal starting point for R&D tax purposes. The better question is narrower: What scientific or technological uncertainty was the project seeking to resolve?
Two recent First-tier Tribunal decisions illustrate the point well:
- M&C Educational Training Services Ltd v HMRC [2025] UKFTT 1506 (TC); and
- Beer Express Ltd v HMRC [2026] UKFTT 672 (TC).
Although the facts of these two cases were different, the cases share an important theme. In both, the companies could point to projects that were novel, useful and commercially or socially valuable. They were innovative. Both could identify areas of difficulty or uncertainty. Both were connected to well-established scientific or technological fields in which there are many valid claims every year. Yet both claims failed because the Tribunal was not satisfied that the uncertainties were scientific or technological in the sense required by the DSIT Guidelines. These cases give a practical confirmation of the points we made in the previous post: That a project can be innovative, worthwhile and technically adjacent without being R&D for tax purposes. *As an aside, I also particularly like the Beer Express case because they identified a quirk in the Guidelines I noticed when I first started working in R&D tax nearly a decade ago, and have been hoping someone will test out ever since (but we’ll come back to that another day). For now, let’s look at each decision in turn.
M&C Educational Training Services: valuable work, innovative approach, wrong field of advance
M&C Educational Training Services supports manufacturing and metallurgy by developing training courses in metallurgical science. On the face of it, the work had a strong connection to science and engineering. The evidence before the Tribunal included detailed explanations of Britain’s skills gap in metallurgy, the chronic lack of vocational training provision and reliance on foreign-trained staff, as well as the strategic importance of retaining metallurgical knowledge in British industry. The company drew on expert witnesses to support its submissions to the Tribunal. All had exceptional CVs with decades of experience and were strongly supportive of the company’s mission. One went so far as to say that M&C “should in some ways be hijacked by the government, expanded and protected”, which indicates how important the work is to the industry as a whole.
However. That evidence may well show that M&C was doing valuable work. It may show that the company was addressing a real industrial problem. It may also show that its teaching model was innovative within its own market. But these points were not persuasive to the Tribunal.
The difficulty was that the claimed advance was not an advance in metallurgy itself. The advance was in the delivery of metallurgical education. The Tribunal put the point clearly: “The uncertainties and advances to which [M&C] refer are in a social science, education, and not in a field of science or technology.” It also stated that improving the workforce through innovative education and training using existing metallurgical knowledge did not mean that M&C had advanced the underlying field of metallurgy itself.
So, there we have the distinction, teaching science is not advancing science. Or more precisely, improving the teaching of science is not improving science itself.
If M&C had developed their own metallurgical methods, or if they had studied the improvements in weld strength between workers trained in different ways and published the results in a metallurgical journal they might have had a valid project. But simply disseminating existing scientific knowledge in new and better ways does not itself extend overall knowledge or capability in that scientific field. This is consistent with the R&D Guidelines. Paragraph 43 states that: “Information or other content which is delivered through a scientific or technological medium is not of itself science or technology.”
So, although M&C’s work related to metallurgy, the Tribunal viewed the relevant uncertainty as educational rather than scientific. The project was connected to science, but the uncertainty was not in science.
Beer Express: the danger of broad business-improvement claims
Beer Express is different, but the same underlying issue appears. The company claimed for several projects, including:
- the development of a level-loading facility based on AI-enabled forecasting;
- the development of a B2B web platform and automated internal systems for logistics, delivery and stock monitoring;
- beer product development; and
- further product and process changes.
At first glance, some of these projects sound more likely to qualify. AI-enabled forecasting, logistics optimisation, stock monitoring, embedded systems, route scheduling and web platform development can all involve technological work. In the right circumstances, a software or systems-integration project could well involve R&D. There are many companies doing good R&D in this space and we have assisted many of them. But the Tribunal was not satisfied that Beer Express had evidenced the necessary technological uncertainty in a relevant field.
The company’s claim materials referred to demand forecasting, hardware integration, delivery tracking, stock optimisation and bespoke software. This matters because the language used in the claim appears to have drifted away from the technical facts of the project towards business improvement. A “level loading system” is essentially a logistics and operational-efficiency concept concerned with smoothing inventory, ordering, picking, loading and delivery activity. That may be commercially useful, and it may even be operationally sophisticated, it probably even requires new or improved technologies to enable it to work, but like metallurgical education, it is not itself a field of science or technology. There is nothing wrong with an R&D project having a commercial aim. Most do (in fact, most projects boil down to “we want to make more money”). But the claim must isolate the scientific or technological problem within that wider commercial project.
On top of this, the tribunal found their discussion of the project was too broad and general to show that R&D had taken place. Worse, the relevant competent professional had retired abroad and was not available to provide further information that might have supported the claims. For Beer Express, the stronger R&D framing, if the evidence existed, might have focused on questions such as:
- whether existing forecasting methods could handle the relevant data limitations;
- whether a specific algorithmic approach was technologically feasible;
- whether different systems could be integrated in a way that was not readily deducible;
- whether real-time stock, delivery and routing data could be processed reliably enough in practice using available hardware and software for the required operational use;
- whether the development went beyond routine software configuration or bespoke implementation.
But the Tribunal did not have that evidence. Instead, the claim appeared too broad, too closely tied to logistics and business efficiency, and insufficiently anchored in the underlying technology.
The common thread
The useful point from these cases is not that projects that touch on education, software projects, product development or logistics systems can never qualify, it is that the uncertainty must sit in a relevant field of science or technology. A claimant must begin with uncertainty when assessing project to stay clear of this.
In M&C’s case, the field of metallurgy would have been valid, but the uncertainty was about how to educate and train people more effectively. That was treated as education, not metallurgy, and rightly so.
For Beer Express, the software and AI language sounded promising, but like M&C, the report focused on non-scientific requirements like logistics and cashflow, rather than the underlying science or technology.
That is, both companies’ R&D submissions centred on their commercial innovation rather than the narrower, scientific and technological uncertainty.
Both cases show the danger of beginning with novelty, the projects were:
- new to the company;
- commercially useful;
- innovative in the market;
- valuable to industry;
- difficult to implement;
- delivered through technology;
- connected to scientific fields;
but still failed to qualify as the uncertainty was not proven to be scientific or technological in nature.
Practical lessons for claimants and advisors
The first lesson is to define the field properly.
Do not start with “we improved logistics”, “we created a new training model”, or “we developed a bespoke platform”. Ask instead: what field of science or technology is being advanced? Software engineering? Materials science? If the field cannot be stated clearly in a few words, the project boundaries may already be too broad.
The second lesson is to separate the commercial aim from the technological problem.
The commercial aim might be to reduce stock, improve training, increase sales, reduce delivery costs or support industry skills. Those may explain why the project mattered, but they do not explain why it qualifies. In fact, I almost always tell clients to avoid mentioning the commercial drivers for a project in the narrative itself. That detail can be put in the main report if it helps add context, but for the project narrative itself, it helps to keep rigidly to the technical aspects to avoid confusion.
Conclusion
The message from M&C and Beer Express is not that commercially focused projects are excluded; R&D often takes place within commercial projects. It is that the claim must be anchored in the underlying science or technology. M&C shows that advancing the delivery of scientific education is not the same as advancing science itself. Beer Express shows that using technological language, AI, algorithms, automation, is not enough unless the aim is technological in nature and technological uncertainty is clearly evidenced. Both cases failed not because the projects lacked value, but because the value was not shown to arise from resolving scientific or technological uncertainty. That is why the starting point should never be: what was innovative?
It should be: What was scientifically or technologically uncertain?