R&D claim deadline - 1 or 2 years?

HMRC say there is one year to make an R&D claim, our accountants say two. Who is correct?

Didn't find your answer?

We submitted an R&D claim in March 2023 that was between 1 and 2 years after our accounting period. HMRC rejected this as out of time, and quoted Statement of Practice 5 (2001)- FA98 / SC H18 / PARA74 (2) sections 1 through 13. That text would suggest the time limit to indeed be one year, contrary to our accountant and comments on this by other firms. There is also CIRD81800, which suggests one year after the filing deadline for accounts.

Any clarity on this and pointers to the relevant HMRC guidance most welcome.

 

Replies (45)

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By Ruddles
22nd Jan 2024 14:14

On the face of it, HMRC seem to be wrong. But if you could provide some actual dates ...

(Not sure where you are seeing SP5/01 as suggesting a 1-year time limit)

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Replying to Ruddles:
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By ioncube
22nd Jan 2024 14:52

Thanks for the reply. Accounting period end is 30 March, we submitted for 2021 during March 2023. We have made claims for a few years prior on a similar 2 year basis with no issue.

The only section I found was section 3 says that says claims under CTSA can be made "up to the latest of... the first anniversary of the claimant company's filing date".

The HMRC agent wrote:

The time limit for submitting a claim mirrors the time-limit for submitting a corporation tax
return, I.e. a return/claim should be submitted within 12 months following the accounting
period end and any amendment to that return should be submitted within 12 months
following that date; i.e. for an account period ended 30 March 2021 a return should be
submitted on or before 30 March 2022 and any amendment on or before 30 March 2023.
I must therefore advise you that this submission is •out of time'. In exceptional
circumstances submissions made out of time may be accepted but only where these
circumstances flt the criteria as described in SPS/01. I would refer you to the attached copy
and in particular paragraphs 9-13.
Please note that although SPS/01 does not expressly mention R&D claims, such claims are
subject to the same time restraints.

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Replying to ioncube:
By Ruddles
22nd Jan 2024 15:06

You haven't provided all of the dates (to be fair, I only asked for "some" :)) - was this an amendment to a return, and in any event what was/were the actual date(s) of submission?

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Replying to Ruddles:
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By ioncube
22nd Jan 2024 16:48

"Accounting period end is 30 March, we submitted for 2021 during March 2023."
So we filed the return for the year ending March 30 2021 at some point during and before March 30 2023. Are there any other relevant dates?

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Replying to ioncube:
By Ruddles
22nd Jan 2024 16:52

I'm getting a little frustrated here - you haven't answered my (and others) questions properly. Was this a late submission of the return or an amendment to a return filed on time?

(I don't think it affects the end analysis but might help to explain where HMRC have gone wrong)

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Replying to Ruddles:
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By ioncube
22nd Jan 2024 17:27

Is it "late"? What would constitute a "late submission", or put another way, when is the deadline for an R&D claim for a year end of March 30 2021. We assume it's March 30 2023, that being 2 years after accounting year end, and if so, no, it's not late, because we filed before March 30 2023, as stated previously.

"Amendment", no, it isn't, it is the initial filing.

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Replying to ioncube:
By Ruddles
22nd Jan 2024 17:29

You are confusing (as is the HMRC Officer, it would seem) late submission of a return with late making of a claim. So, IMO, you have filed a late return but made a timely R&D claim.

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Replying to Ruddles:
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By ioncube
22nd Jan 2024 17:36

Interesting and thanks for spending time replying on this. When suggesting we made a late return, I'm wondering about return of what? Our accounts were filed on time. Ignoring the new requirements to notify of intent to make a claim as it's not relevant, is there an intermediate step between filing accounts and submitting the R&D claim? I'm not aware of there being one for previous years when we made successful claims. Also, the R&D claim was within two years of filing the accounts.

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Replying to ioncube:
RLI
By lionofludesch
22nd Jan 2024 16:54

ioncube wrote:

"Accounting period end is 30 March, we submitted for 2021 during March 2023."
So we filed the return for the year ending March 30 2021 at some point during and before March 30 2023. Are there any other relevant dates?

Can you not just say plainly when the original return was submitted?

Was it late or not?

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Replying to lionofludesch:
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By ioncube
22nd Jan 2024 17:21

As stated, we filed an R&D claim for the year ending March 30 2021 in March 2023, before March 30 2023.

Was it late? We don't believe it to be because it was filed within two years of year end. HMRC do think it was late.

Was it an amendment? No. My wording has consistently been to say when we filed a claim. An amendment would not be filing a claim, but adjusting an already filed claim. Hope that clarifies :)

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Replying to ioncube:
By Ruddles
22nd Jan 2024 17:35

ioncube wrote:

>Was it an amendment? No. My wording has consistently been to say when we filed a claim. An amendment would not be filing a claim, but adjusting an already filed claim. Hope that clarifies :)

We now understand what you mean, but the wording above is still very confused. Saying that you filed a claim is very different from saying that you filed a return. An amendment (which could be the 23rd amendment of a return) might well involve filing a claim. An amendment of a return would be exactly that - it might involve changing an already filed claim but not necessarily, the amendment might be the making of the claim.

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Replying to ioncube:
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By FactChecker
22nd Jan 2024 17:39

These kind of issues/uncertainties tend to arise where someone (whether taxpayer or HMRC agent) reads just one part of the legislation without reference to other related parts.
I'm no expert in this area but, as per hints from others on this thread, you should consider:
* s 83B (1) and (2) of Schedule 18 of the Finance Act 1998;
* and also s 83E (1) of the same.

So, for instance, when you say "we filed an R&D claim for the year ending March 30 2021 in March 2023" ... was the 'R & D claim' part of a CT return?
And if so, was that CT return the first time filed for that AP, or an amendment (to include the claim) filing?

EDIT: I see that Ruddles has (again) beaten me to it - and has probably expressed what I was trying to indicate more clearly!

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Replying to FactChecker:
By Ruddles
22nd Jan 2024 17:47

FactChecker wrote:
So, for instance, when you say "we filed an R&D claim for the year ending March 30 2021 in March 2023" ... was the 'R & D claim' part of a CT return?

A very important question! I think we have all assumed (I know that I have) that the claim was included in the (late) CT600.
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Replying to Ruddles:
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By ioncube
22nd Jan 2024 18:08

Yes, FactChecker's reply was helpful. Apologies for confusion!

A CT filing would always be filed on time. If the mechanics of an R&D claim is that they are part of a CT filing, the R&D claim would indeed involve an amendment to the CT filing.

The timeline from my perspective is that accounts get completed close to the deadline in December, and we get chivvied by the accountant the following February to make time to do a claim for the year end two years prior.

So:
Dec 2022 we completed accounts for the 2021-2022 AP.
Feb 2023 we would work on the claim for 2020-2021 (CT submitted Dec 2021)
Dec 2023 we filed accounts for 2022-2023.
Feb 2024 we will work on the claim for AP 2021-2022 (CT submitted Dec 2022)
A claim for the accounts filed last month would be worked on in Feb 2025.

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Replying to ioncube:
By Ruddles
22nd Jan 2024 18:38

If the 2021 CT600 was submitted on time - in Dec 2021 (without an R&D claim) - and was then amended to include the R&D claim by 30 Mar 2023 the HMRC Officer is talking utter nonsense. The response is simple - ask him/her to explain how the time limit at para 83E has not been met.

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Replying to Ruddles:
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By ioncube
22nd Jan 2024 18:53

Thanks for your patience! I've been attempting to engage with HMRC on this for some months but they're staying silent. The phone number in their letter is never answered, the main helpline number reaches a dead end, no response from the HMRC officer on LinkedIn, no response to emails. The officer is junior and maybe there's a lack of training, or perhaps on the contrary, there has been some very specific training. Something should be sent in writing, but would then try the route of making a complaint.

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Replying to ioncube:
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By Rgab1947
24th Jan 2024 15:08

Probably too busy walking the dog/changing the baby's nappy.

WFH is lovely.

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Replying to ioncube:
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By Sarah Tran
24th Jan 2024 12:50

Let's look at one year 1st. Accounts ended 31 March 2021, filed the initial return in Dec 2021.

Both regulations you referred to CIRD81800 & Practice 5 (2001)- FA98 / SC H18 / PARA74 (2) sections 1 through 13 state that:

"A claim may be made or withdrawn at any time up to... the first anniversary of the filing date for the company tax return of the claimant company for the accounting period for which the claim is made"
(which is Dec 2022)

Thus, I think there is a basis for the HMRC officer in saying your submission in Mar 2023 is late.

Please help to shed some light here if I'm wrong.

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Replying to Sarah Tran:
By Ruddles
24th Jan 2024 13:03

I suggest that you read FA 1998 Sch 18 para 14

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Replying to lionofludesch:
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By ioncube
22nd Jan 2024 17:40

Sorry for confusion about return, if by that you mean submitting the EoY accounts. Those were not late.

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Replying to ioncube:
Danny Kent
By Viciuno
22nd Jan 2024 15:46

Was your first submission of the return late and you missed the 2022 deadline?

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Replying to Viciuno:
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By ioncube
22nd Jan 2024 17:30

Is the deadline 2022, or is it 2023? Frustrated Ruddles says "The company has 2 years from the end of the period of account to make an R&D claim", consistent with our accountants view and multiple sources online, which would be 2023, not 2022.

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Replying to ioncube:
By Ruddles
22nd Jan 2024 17:39

You need to (try and) understand that there are two deadlines here. 30 March 2022 which is the deadline for submitting the tax return to avoid penalty. 30 March 2023 which is the deadline for filing an R&D claim, and which is also the deadline for amending the tax return, whether to include such claim or otherwise. For avoidance of doubt, and this is the bit that is confusing HMRC, the 30 March 2022 deadline is of no relevance to an R&D claim for the year ended 30 March 2021.

You missed the 30 March 2022 filing deadline, so penalties are in point, but you met the 30 March 2023 claim deadline.

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Replying to Ruddles:
RLI
By lionofludesch
24th Jan 2024 14:27

Ruddles wrote:

You missed the 30 March 2022 filing deadline, so penalties are in point, but you met the 30 March 2023 claim deadline.

OP says initial return was filed in December 2021.

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Replying to lionofludesch:
By Ruddles
24th Jan 2024 14:37

lionofludesch wrote:

Ruddles wrote:

You missed the 30 March 2022 filing deadline, so penalties are in point, but you met the 30 March 2023 claim deadline.

OP says initial return was filed in December 2021.


Yes - but half an hour after my comment above, and long after I and others had already asked for clarification of the timeline!
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Replying to Ruddles:
RLI
By lionofludesch
24th Jan 2024 14:41

Ruddles wrote:

Yes - but half an hour after my comment above, and long after I and others had already asked for clarification of the timeline!

Yes - I was one of them.

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Danny Kent
By Viciuno
22nd Jan 2024 14:17

The rules have recently changed so what you are reading online may or may not be relevant to your case however I was under the impression it was 24 months from the end of the AP under the old rules. Thought you had one year to file, then you could amend within the following 12 months as well.

I may be wrong though, and if I was advising someone I'd be checking before I said anything (it really have been a while since I last looked at this!). I presume your accountant has done the same and they will have a reasoning behind their assertion - I'd straight up ask them.

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By Truthsayer
22nd Jan 2024 14:23

Where does it say that in Statement of Practice 5 (2001)- FA98 / SC H18 / PARA74 (2) sections 1 through 13? I've read it and it says nothing that could be interpreted that way. Not that it would matter, as a SoP does not override legislation of course, and the legislation is clear that there is a two year limit.

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By SkyBlue22
22nd Jan 2024 14:24

I've been dealing with R&D for a little while. As far as I know no deadlines in terms of actually claiming has changed (so still 2 years) however if you've not made a claim before, or not in 3 years, you only have 6 months from the year end to notify HMRC you want to make one.

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Replying to SkyBlue22:
By Ruddles
22nd Jan 2024 14:27

But that new requirement applies only for APs beginning after 31 Mar 23

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RLI
By lionofludesch
22nd Jan 2024 15:07

".... i.e. for an account period ended 30 March 2021 a return should be submitted on or before 30 March 2022 and any amendment on or before 30 March 2023."

Well, presumably you submitted a return by 30 March 2022 and amended it by 30 March 2023, did you not?

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Replying to lionofludesch:
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By FactChecker
22nd Jan 2024 15:39

Is it possible that the HMRC Agent's previous 'sub-sentence' (I've never previously encountered a 'nested' i.e.) is considered, by them, to mean something else:
"I.e. a return/claim should be submitted within 12 months following the accounting period end and any amendment to that return should be submitted within 12 months following that date"
... as in the final two words referring to the date when the return was actually submitted, rather than its maximum deadline?

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Replying to FactChecker:
RLI
By lionofludesch
22nd Jan 2024 15:45

Could be.

Though what he means is less relevant than whether his interpretation is right.

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Replying to lionofludesch:
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By FactChecker
22nd Jan 2024 16:01

Very true. :=)

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Replying to lionofludesch:
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By ioncube
22nd Jan 2024 16:53

"Well, presumably you submitted a return by 30 March 2022 and amended it by 30 March 2023, did you not?"
Yes, we did not; we filed during March 2023, with that being less than 2 years after the end of the related accounting year, hence the quest for clarification on this and whether the "two years to file" that's oft stated isn't entirely accurate, and it's really "two years to file and amend, with the initial filing made within 12 months".

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Replying to ioncube:
By Ruddles
22nd Jan 2024 17:03

OK - I can only guess at what was going through the Officer's mind, but suspect it was something like this.

"You filed the return late, and therefore the R&D claim was late." What he seems to be implying is that had you filed the return (late) without the R&D claim and then amended it you would have been OK. Or that a return can only be amended if it has already been filed on time. Or something else.

But he is wrong.

The company has 2 years from the end of the period of account to make an R&D claim (FA 1998 Sch 18 para 83E). The only other relevant condition is that the claim must be included in a return. There is no requirement that the return itself must be on time.

I think we'd all like to hear how this pans out - to find out whether this is a widespread misunderstanding on the part of HMRC or just down to the muddled thinking of one rogue Officer.

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Replying to ioncube:
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By jamesjcrylatt
27th Jan 2024 20:29

It would be helpful to confirm the *exact* date of the CT600 submission in March 2023. It may be that 'we filed during March 2023' actually meant 31 March which, whilst a much more common filing deadline, would be out of time if these periods really are running to 30 March. It wouldn't be the first time I'd seen an R&D claim missed as accounting periods didn't run to the end of a calendar month.

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Replying to jamesjcrylatt:
By Ruddles
27th Jan 2024 20:35

OP has already been asked to provide exact dates but seems reluctant to provide them. Although they have said that filing was before 30 March.

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Replying to Ruddles:
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By ioncube
29th Jan 2024 16:28

In this case, the junior and not long in the job HMRC officer said we were out of time because the deadline was one year, so making the claim in March or any a year's worth of months prior would have resulted in the same outcome. The exact date, time and timezone therefore really doesn't matter because it's not an issue of whether we were within year two or just outside of it, but were we 12 months outside of the deadline. We've had successful claims in prior years and our accountant has made successful R&D claims for other clients, so they are familiar with the process. So there were really two aspects to the question; is the deadline one or two years, and where is this officially stated?

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Replying to ioncube:
By Ruddles
29th Jan 2024 16:39

ioncube wrote:
. So there were really two aspects to the question; is the deadline one or two years, and where is this officially stated?

Are you still asking, or does "were" mean "were"?

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Replying to jamesjcrylatt:
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By ioncube
29th Jan 2024 15:41

"It may be that 'we filed during March 2023' actually meant 31 March"
It could, but not really. Putting aside that the 31st would more precisely be stated as "at the end of" or "on the last day of" March, which is what I would have said were that actually the case, more important is that it would be outside of the two year window. It should be evident from the discussion that we filed within a two year window, therefore implicit that the filing was before the 31st. Some interesting subtleties did emerge in the discussion, but the fundamental question was simply as to whether the submission deadline actually two years, and if so where is that officially written, or whether as HMRC assert, it is one year.

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Replying to ioncube:
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By richard thomas
29th Jan 2024 20:54

I can but admire your patient, nay stoical, attitude in the face of some fairly pointless questions, especially given that you have already answered them in terms that are relevant to your initial question.

No one who has contributed thinks other than that the time limit for a claim is 2 years after the end of the accounting period, which was your question. The only matter which puzzles anyone, indeed all those who contributed as well as you, is why HMRC think that your client company did not meet this deadline, as it’s not clear from the text of their letter that you quote. They do give the right answer and their “i.e.” (should be “e.g.”) is also correct.

They can only be saying that you did not make the claim in an amendment before the 31 March 2023. There is one circumstance in which the exact date may be relevant, though this point is not mentioned by anyone before.

If HMRC did not receive the claim in an amendment before 31 March 2023 they may be arguing that the claim was not made in time by notice of amendment. If the amendment was made electronically this situation can arise if the amendment was submitted on 30 March or before but not recorded on HMRC’s computer system until 31 March or later.

There is a presumption that non-recording is non-delivery, based on the same presumption that applied in the prosecutions of sub-postmasters, though in this case it is in Revenue-specific secondary legislation. It can be rebutted.

If the amendment was made by post then 7 Interpretation Act 1978 applies, so that posting at a time which would allow in time delivery in the ordinary course of post is sufficient.

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By richard thomas
23rd Jan 2024 10:38

I’m still somewhat mystified by what has actually happened here, especially by the OP’s post of 16:43 yesterday, though it may have been clarified by their post of 18:08 upthread. But one way or the other it seems a valid claim for R&D relief has been made in time: whether made in a (late) original CT600 or in an amendment to that CT600 is irrelevant – the time limit for the claim is the same, two years after the end of the accounting period.

The HMRC letter is inexplicably wrong. What it says about the time limits is right but it doesn’t seem to acknowledge that a claim was made before the end of March 2023, self-evidently within the time limit.

What worries me is the silence from HMRC and what can be done about it if they never respond. This aspect mirrors what was said by FactChecker and me in comments on Philip Fisher’s article “HMRC tightens up the PPI repayments process” about giving effect to claims that are intended to result in repayment (which I assume is what this is).

The question here is what can be done by the OP or their accountant in the face of this silence. There is only one way to appeal against a failure to process a claim and give effect to it by repayment, and that is by appealing against the conclusions of an enquiry. The question then is – has HMRC by its response opened and then closed an enquiry. The answer is almost certainly no, as established by the Court of Appeal in HMRC v Raftopoulou – see in particular [37] – [40], but for a possible way out see what they say about Portland Gas.

The only alternatives are judicial review (which would need to be started within 3 months of the HMRC decision and could be costly, especially if you lose) or not paying the equivalent amount of CT and disputing it in the County Court.

I would though suggest that a claim under section 59DA TMA 1970 might be possible and should be researched with the OP’s advisers.

But possibly the best step now is to start the complaints procedure.

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By ioncube
23rd Mar 2024 21:14

Update on this: out of the blue we recently received payment plus interest calculated at various rates based on the date we submitted. No apology. No explanation for their screwup. No replies to any of the various emails sent to them. But cash in the bank which is what matters. Thanks for the input from everyone reinforcing our conviction that we were in the right.

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Replying to ioncube:
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By richard thomas
23rd Mar 2024 21:47

Excellent news - result for joint effort of AWeb and you.

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