What happened
Tanglewood operates residential nursing care homes, seven of them in the relevant period, with mostly elderly and highly vulnerable residents. Its claim covered a single project titled “Managing outbreak & effects of a Global Pandemic in a residential care home (Covid-19)”. The work was the pandemic response itself. The measures were PPE requirements, visitor restrictions, testing arrangements, isolation procedures, cohorting of residents, staff segregation, enhanced cleaning protocols and revised admissions procedures.
The chronology matters. The company filed its return for the period in February 2022 with no R&D claim in it. The claim arrived by amendment in September 2022, roughly nineteen months after the period ended. HMRC enquired, then issued a closure notice removing the whole £880,286. The tribunal heard the appeal in July 2026 and dismissed it on 6 August. From period end to decision took five and a half years. If your own Covid-era claim is still under enquiry, that is the realistic timescale of a fight. And this decision is now the one HMRC will cite while yours runs.
What the company won, and why it matters
The decision is not the sweeping HMRC victory a headline suggests. The company won three points of principle, and each one keeps a door open for genuine claims.
First, the tribunal rejected HMRC’s argument that there was no “project” at all. No formally documented plan is required by the Guidelines. A coordinated programme of information gathering, review and implementation, directed at a defined objective, was enough (paragraph 87).
Second, it rejected the argument that a claim must advance underlying scientific knowledge. An advance in overall capability counts. The Guidelines expressly contemplate uncertainty in “turning something already known to be scientifically feasible into a cost-effective, reliable and reproducible process, product or service” (paragraph 94). In the tribunal’s words, “a project may satisfy the Guidelines without generating new scientific knowledge” (paragraph 98). One reading did go HMRC’s way alongside these: paragraph 9 of the Guidelines cannot be read in isolation, so “a product, process or service does not qualify merely because it exhibits some improved functionality” (paragraph 93).
Third, it accepted system uncertainty in principle. Uncertainty about how known measures interact when combined into one system can be scientific or technological uncertainty. A claim does not fail “because it relied upon a combination of existing measures rather than the development of entirely new ones” (paragraph 104).
Those findings make the dismissal more instructive, not less. The routes the company argued for all exist. It lost on what its evidence showed the work actually was.
Why it failed anyway
On the advance: the project’s objective was to work out how best to deploy, balance and manage infection-control measures within the company’s own homes. The Guidelines require an advance in overall knowledge or capability in a field, not an improvement in one operator’s practice. The activities “were directed towards the practical management of an unprecedented operational challenge” (paragraph 99).
On uncertainty: the tribunal accepted that the period was saturated with real uncertainty, and that scientific understanding of Covid-19 remained incomplete throughout. But the uncertainties this company faced were staffing, visitor policy, admissions, procurement and compliance. “Those were real and difficult problems, but they were predominantly operational and managerial in character” (paragraph 106). The company was determining how best to respond to evolving scientific knowledge and public-health advice. “That is not the same thing as resolving a scientific or technological uncertainty within the meaning of the Guidelines” (paragraph 108).
Two threads of that reasoning reach well beyond care homes. Paragraph 15 of the Guidelines excludes work in the social sciences. The tribunal used it to characterise questions of organisation and management as sitting outside science for R&D purposes. Any claim built on process improvement, workflow redesign or operational optimisation now has to answer that characterisation. And the tribunal’s summary of the whole record is a sentence every borderline claim should be tested against. The evidence showed “operational decision-making, risk management and the adaptation of existing knowledge and guidance to the particular circumstances of the Appellant’s care homes” (paragraph 119). If that sentence describes your project, it is not describing R&D.
Credibility is not competence
Here is the part that should change behaviour. The tribunal found the three witnesses, the founder among them, honest, conscientious and deeply experienced in running care homes. It accepted their evidence. It praised the company’s response, noting that some measures were adopted before similar approaches appeared in government guidance.
None of that could carry the claim. No witness “claimed expertise in virology, epidemiology, infectious disease transmission, infection science or any other scientific or technological discipline” (paragraph 112). The tribunal was careful about what this means: it did not hold that the company needed a virologist. The problem was that without anyone “able to speak authoritatively to the relevant field”, the tribunal had no evidence of the baseline. It could not assess whether the uncertainties were scientific, or whether a competent professional could readily have resolved them. Nor could it assess whether anything advanced beyond the company’s own operations (paragraph 113).
One finding makes this sting. The judgment records that the management team included people with nursing qualifications and clinical experience. Yet the expertise of the witnesses who appeared lay primarily in the management and operation of care homes (paragraph 83). The decision does not explain how the witnesses were chosen, and we will not guess. What it shows is that the gap was evidential. The tribunal was left “without sufficient evidence” on the questions that decided the appeal (paragraph 113). The competent professional is central to both statutory tests, at the claim stage and in the hearing room. A claim that cannot name that person on day one is carrying this risk from the start.
What to take from it
If you hold a Covid-era claim in care or another operational sector, read your own narrative against paragraph 119 and the red flags list. If the claim is within the amendment window, it can be corrected; beyond that there are disclosure routes. The context for why this sector drew scrutiny is on the crackdown page.
If you are building a genuine claim, take the two constructive holdings with you. A capability advance built from known components can qualify, and no formal project plan is required. What the tribunal needed and never got was a named person who could speak with authority to the field. It also needed records showing “a systematic process of investigation or experimentation” rather than good operational management (paragraph 115). That person and that evidence belong in the technical narrative from the beginning, not assembled nineteen months later.
Frequently asked questions
Does Tanglewood mean Covid-response work can never qualify as R&D?
No. The tribunal accepted in principle that combining known measures can involve qualifying system uncertainty, and rejected HMRC's argument that a claim must advance underlying science. This claim failed because the evidence showed work directed at managing the company's own homes, not at advancing knowledge or capability in a field. First-tier decisions also bind only the parties to them, so the loss puts no sector outside the relief. A project genuinely directed at resolving scientific or technological uncertainty would be assessed on its own facts.
Do we need a scientist to give evidence for an R&D claim?
Not necessarily. The tribunal said expressly that the relevant field did not have to be virology or epidemiology. What sank the claim was that nobody before the tribunal could speak authoritatively to any relevant field, so there was no evidence of what a competent professional already knew or could readily work out. Identify that person at the start of a claim, not at a hearing.
Is a formal written project plan required?
No. The tribunal held that the Guidelines do not require a formally documented plan, and found a genuine project on the evidence. But operational records are not technical records. What was missing was evidence of a systematic process of investigation or experimentation, which is a different thing from good management reporting.
We claimed for pandemic measures in a care setting. What should we do now?
Read your claim against this decision honestly. If the narrative describes adapting guidance and managing operations, the characterisation problem Tanglewood describes applies to it. Options depend on where the claim stands: within the amendment window it can be corrected, and outside it there are disclosure routes. This is a decision to take with a regulated adviser on your specific facts.