BUREAU WORKSPACE LTD AGAINST ADVOCATE GENERAL FOR THE COMMISSIONERS OF HMRC

Factual and Procedural Background

In this judicial review petition, Company A sought to claim Research and Development Expenditure Credit ("RDEC") for two accounting periods, AP19 and AP20. Company A appointed Agents as its corporation tax advisors. The Agents filed the corporation tax return and computation for AP20 on time. However, for AP19, the Agents attempted to file an amended return including an RDEC claim before the deadline but failed to include the required corporation tax computation on time due to technical difficulties. The computation for AP19 was only submitted 20 days after the deadline. HMRC refused to process the late claim, citing non-compliance with statutory filing requirements and time limits. Company A challenged HMRC’s refusal on grounds of legal error and unreasonableness under the Wednesbury principle.

Legal Issues Presented

1. Whether HMRC erred in law by refusing to process the RDEC claim on the basis that the corporation tax computation was not included with the amended return at the time of filing.
2. Whether HMRC’s refusal to allow the late claim was Wednesbury unreasonable, i.e., irrational or unreasonable to the extent that no reasonable authority could have made the decision.

Arguments of the Parties

Appellant's Arguments

• No statutory requirement under paragraph 15 of Schedule 18 of the Finance Act 1998 mandates filing the corporation tax computation simultaneously with the amended return, especially for electronic submissions.
• The HMRC manuals and guidance do not impose a binding requirement that computations must accompany electronic amendments.
• The amended return filed on 23 December 2021 without the computation constituted a valid claim within the deadline.
• The delay in submitting the computation was due to technical issues with the Agents' software and the intervening Christmas holiday period.
• HMRC’s refusal was disproportionate given the short delay (20 days) and the absence of prejudice to HMRC.
• HMRC’s discretion under Schedule 18 should have been exercised to allow the late claim.

Respondent's Arguments

• HMRC’s published manuals and guidance clearly require all RDEC claims made by amendment to include both a completed CT600 form and a corporation tax computation.
• There is statutory authority under Schedule 18, paragraph 15, empowering HMRC to require the form and content of amended returns, including computations.
• The claim filed without the computation was incomplete and therefore invalid at the deadline.
• HMRC’s discretion to accept late claims is exercised in accordance with Statement of Practice SP5/01, which requires exceptional circumstances beyond the company’s control.
• The delay was due to oversight or negligence by the Agents and Company A, not exceptional circumstances.
• The Agents failed to take available steps to rectify the missing computation before the deadline despite knowledge of the issue.
• HMRC’s decision to refuse the late claim was reasonable and within the range of decisions available to a reasonable tax authority.

Table of Precedents Cited

Court's Reasoning and Analysis

The court examined the statutory framework under Schedule 18 of the Finance Act 1998, which empowers HMRC to require amended returns to be in a form and accompanied by information it reasonably requires. The court found that HMRC had validly imposed a requirement that RDEC claims made by amendment include a corporation tax computation, as set out in HMRC's published manuals and Agent Update 70. The court rejected the Appellant’s argument that this requirement did not apply to electronic submissions, noting that the detailed manuals supersede the brief summary in the Update.

The court held that the submission of the amended return without the corporation tax computation on 23 December 2021 did not constitute a valid claim within the statutory deadline. The claim was only validly made on 20 January 2022 when the computation was provided, which was late.

Regarding the exercise of discretion under paragraph 83A(2) of Schedule 18 to allow a late claim, the court accepted HMRC’s application of Statement of Practice SP5/01. HMRC reasonably concluded that the delay was due to oversight or negligence by the Agents and Company A, rather than exceptional circumstances beyond their control. The Agents had knowledge of the missing computation and failed to take timely corrective action despite available alternatives such as emailing the documents.

The court rejected the argument that the intervening Christmas holiday justified the delay, emphasizing that agents should have arrangements in place to meet deadlines occurring during holiday periods. The court also rejected the contention that HMRC could not expect finality before 20 January 2022, affirming that statutory deadlines provide certainty for both taxpayers and HMRC.

The court further reasoned that the tax system requires claimants to lodge the necessary information; HMRC is not obliged to deduce or compute claims from incomplete submissions. The decision to refuse the late claim was within the range of reasonable decisions and was not Wednesbury unreasonable.

Holding and Implications

The court refused the petition, upholding HMRC’s decision to reject the late RDEC claim for the accounting period ending 31 December 2019.

The direct effect is that Company A’s late claim will not be processed or allowed. The court’s decision confirms the validity of HMRC’s procedural requirements and discretion in enforcing statutory deadlines for tax claims. No new legal precedent was established beyond affirming the reasonableness of HMRC’s approach and the necessity of compliance with filing requirements and deadlines.