Laxzo Ltd v The Commissioners For HMRC [2025] UKFTT 372 (TC)

[2025] UKFTT 00372 (TC)Case No TC09466
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 05 March 2025Date Judgment date: 27 March 2025
[By remote video/telephone hearing]
Appeal reference: TC/2023/16619
CORONAVIRUS JOB RETENTION SCHEME- Whether claims for payments under the CJRS were correctly calculated - no- whether claims had to refer to those employees shown on a Real Time Information return on or before 19 March 2020 - yes- whether the assessments should be reduced - yes- Paragraphs 5,7 and 8 of the Coronavirus Act 2022 Functions of Her Majesty’s Revenue & Customs (Coronavirus Job Retention Scheme) Directions and paragraphs 8, 9 and 11, Schedule 16 Finance Act 2020 - Appeal dismissed.
Before
TRIBUNAL JUDGE RUTHVEN GEMMELL WSTRIBUNAL MEMBER JANE CUMMINS
Between
LAXZO LTDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentSiddiqullah Saleem, Director of Laxzo Ltd, (“counsel for LL”) and Heena Baxana for AppellantLouise Hartsill, Litigator of HM Revenue and Customs’ Solicitor’s Office, (“counsel for HMRC”) for RespondentsDECISION

Introduction

[1]The form of the hearing was by video, and all parties attended remotely. The remote platform used was the Teams video hearing system. The documents to which we were referred comprised of a Hearing bundle of 941 pages, an Additional Documents and Authorities Bundle of 45 pages, a statement of case by Laxzo Ltd, the Appellant,(“the Appellant”/LL”) of 10 pages, an Appellant Document bundle of 241 pages and an Outline argument for the Respondents (“the Respondents/HMRC”)[2]Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely to observe the proceedings. As such, the hearing was held in public.[3]LL appealed against three assessments (“the assessments”) which were issued pursuant to paragraph 9, schedule 16 to the Finance Act 2020 (“FA 2020”) for the tax year ending 5 April 2021.[4]LL subsequently accepted HMRC’s offer of a review which upheld the decision to issue the assessments but recommended varying the amount raised to £80,744.39 for the accounting period ending 31 January 2021 and cancelled the other two assessments.[5]Accordingly, HMRC requested that that the tribunal use its power to reduce the remaining assessment under Section 50(6) Taxes Management Act 1970 (“TMA 1970”) to £80,744.39.[6]The appeal was late by three days, but HMRC had no objections to the appeal proceeding.[7]The tribunal, therefore, allowed the appeal to proceed.

Facts and Evidence

[8]The Appellant, which was launched in 2012, sells bikes and bike accessories, such as brakes, wheels and inner tubes. It also sell masks and following the coronavirus epidemic the demand for masks increased considerably. LL said it had to give 90% of the staff extra salary as it could not cope with demand for their products, particularly masks, with the consequent increased warehouse staff hours and wages. Shortly before lockdown the company moved to a new warehouse and at this time Siddiqullah Saleem (“SS”), the director of LL, had a baby.[9]The tribunal (“the tribunal/we/our”) heard evidence from SS and from HMRC Officer Alison Walker, who had worked for HMRC for 6 years and had been in the Coronavirus Job Retention Scheme (“CJRS”) Team since January 2021. Both were credible witnesses and were examined and cross-examined[10]The Appellant made 18 claims under the CJRS during the period in question, for two months ended 30 April 2020, and the months ended 31 May 2020, 30 June 2020, 31 July 2020, 31 August 2020, 30 September 2020, 31 October 2020, 30 November 2020, 31 December 2020, 31 January 2021, 28 February 2021, 31 March 2021, 30 April 2021, 31 May 2021, 30 June 2021, 31 July 2021, 31 August 2021 and 30 September 2021.[11]On 23 November 2021, HMRC wrote to the Appellant to advise that they were opening a check into the Appellant’s claim of Support Payments through CJRS. HMRC’s letter set out what information was required to check the Appellant’s claim in relation to the CJRS claimed.[12]The parties held a telephone meeting on 9 February 2022. The Appellant’s director SS advised that trade increased during the Coronavirus lockdown period resulting in the company increasing the warehouse staff hours and wages. Extra warehouse staff were hired but never furloughed and two other staff who were hired refused to be included in the company payroll and were paid ‘cash in hand’ off-record. The original hired staff remained furloughed, refusing to come to work. The online site was closed at that time.[13]The Appellant confirmed that it understood that furlough could be claimed from 1 March 2020 and so submitted claims from that date. It decided to give staff a pay rise as an incentive to come into work; however, the furloughed employees chose not to return. The Appellant also confirmed that it did not complete written contracts for the furloughed employees.[14]On 17 January 2022, HMRC received further information from the Appellant with a spreadsheet containing details of reference pay and advising that the Real Time Information (“RTI”) submission was filed on 3 April 2020. The spreadsheet contained a note to say that letters were provided to the employees on 1 March 2020 to formally notify them that their position was being suspended temporarily due to the closure of offices because of the Covid-19 pandemic.[15]On 4th March 2022, the Appellant advised HMRC that its accountant had wrongly claimed furlough from 1 March 2020 and, on 6 July 2022, HMRC requested information in relation to the cash-in-hand off-record workers and requested contact details for those workers.[16]On 20 October 2022, the Appellant responded to HMRC’s request and provided information including employee details, the cash-in-hand off-record worker contact details, time sheets, breakdown of monthly salaries for each employee and furlough details for March 2020 to September 2021.[17]On 24 November 2022, HMRC held a meeting with the Appellant’s agent and on 5 April 2023, HMRC sent letters to the two cash-in hand off-record workers, Mr Khan Mohammed Sameer and Mr Mohammad Admair Ahmed, inviting them to meetings to allow HMRC to ask them questions about the period they were furloughed. Neither responded to the request.[18]On 2 June 2023, HMRC issued a pre-assessment letter advising that they found that the Appellant had incorrectly claimed a CJRS grant payment from 1 March 2020 and had overclaimed for six of their employees who had been included within the company payroll.[19]On 14 June 2023, HMRC issued assessments to recover the amounts of CJRS received by the Appellant that not entitled to. Assessments were for the tax year ending 5 April 2021 in the amount of £80,598.11, a further assessment for the tax year ending 5 April 2021 in the amount of £18,041.81, and a notice of assessment for the tax year ending 5 April 2022 in the amount of £23,904.96. The amounts totalled £122,544.88.[20]On 07 July 2023, the Appellant’s Agent emailed their appeal letter of 4 July 2023 to HMRC. The letter stated that the Appellant believed that all CJRS claims were correctly claimed based on HMRC guidelines.[21]On 20 July 2023, HMRC issued a View of the Matter letter and confirmed that their view had not changed and offered an independent review of the matter.[22]On 26 July 2023, the Appellant requested an independent review, which was acknowledged by HMRC on 14 August 2023.[23]On 07 September 2023, HMRC sent a letter by email to the Appellant to propose an extension of time for the review to be completed. HMRC suggested that the review period would now expire on 22 September 2023.[24]On 20 September 2023, HMRC agreed a further extension with the Appellant’s accountant, Mr Shahzad Khan. The new date for the completion of the review was 20 October 2023.[25]On 20 October 2023, HMRC issued their review conclusion letter, varying the assessments raised[26]The Appellant made nine CJRS claims for six furloughed employees who were all listed on RTI submissions prior to 19 April 2020.[27]There was no dispute that five of these employees should have the reference salary calculated as “fixed rate employees” in accordance with paragraph 7.7 of the Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Directions dated 15 April 2020 (“the Coronavirus Direction”) The monthly salaries at 19 March 2020 ranged between £800.80 to £916.66[28]In January 2020, attendance of the staff became irregular with many members of staff not working after the 16 March 2020 Prime Minister’s announcement. The Appellant say that increased salary amounts were necessary in order to attract employees to work and to run its business.[29]Each was paid a monthly salary of £3,000 and these were verbal agreements made in good faith to address the operational pressures.[30]One employee, Lesley Hurtado, started employment on 01 January 2020 and was considered to be a variable rate employee as required by the Coronavirus Direction which meant a different method is used by which to establish her reference salary.[31]Employers have a choice of 2 methods to establish this reference salary being the greater of: “(a) the average monthly (or daily or other appropriate pro rata) amount paid to the employee for the period comprising the tax year 2019-20 (or, if less, the period of employment) before the period of furlough began and (b) the actual amount paid to the employee in the corresponding calendar period in the previous year.”(a) is referred to as the average method and(b) as the look-back method. As Lesley Hurtado had started employment on only 1 January 2020, the look-back method was not applicable having no employment with the Appellant during the same calendar period in the period spanning March 2019 to December 2019. This employee’s level of pay also rose to £3000 per month following 01 March 2020.[33]SS painted a picture of the actual circumstances at the time of the Covid-19 pandemic and stated that the focus was on life and death and this was the central matter of concern rather than reading detailed guidance on tax matters. In addition, his company were providing bicycle products and masks which not only allowed it to continue to operate and provide employment but also contributed towards the ability for people to carry on their lives as safely as possible given the conditions created by the pandemic.[34]The Appellant justified the increase in salaries as a means of ensuring that his employees returned to work and were retained as a result of rapid business growth and worked at a time when the company was exceptionally busy, especially in relation to providing facemasks and at a time when it was moving to a new warehouse under tight deadlines.[35]The Appellant did not consider that its CJRS claim was inflated and HMRC maintained that it was.[36]The Appellant relied on external accountants to deal with its payroll and says it is disadvantaged because it submitted its PAYE returns on a monthly basis so that although the increased salaries were payable as from 01 March 2020, they were not contained in a return that there was filed under RTI until after 19 March 2020.[37]The Appellant says that the relevant date was changed from 28 February 2020 to 19 March 2020 being an example of the confusing approach to the legislation and that its decision to increase salaries to address operational needs occurred before the announcement of the CJRS guidelines on 15 April 2020 which was prior to the rules requiring pre-19 March 2020 reference salary information.[38]On 23 November 2023, the Appellant appealed to the Tribunal.[39]On 9 May 2024, the parties entered Alternative Dispute Resolution but the parties failed to reach a resolution of the dispute.

POINTS AT ISSUE

[40]The issues before the tribunal are :a. Whether HMRC’s assessment is correct, competent and in time and;b. Whether the Appellant satisfied the conditions of the First Coronavirus Direction (“the Coronavirus Direction”). This requires determination as to whether paragraphs 5, 7 and 8 are satisfied, which set out requirements the Appellant must fulfil to claim for Support Payments.[41]The Appellant’s eligibility as a qualifying employer is not challenged

BURDEN OF PROOF

[42]HMRC bears the burden of proving the Appellant did not satisfy the conditions of the Coronavirus Direction and is liable to an income tax charge under paragraph 8 of the FA 2020, as assessed under paragraph 9.[43]The burden is on the Appellant to prove it has been overcharged by the assessment.[44]The standard of proof is the ordinary civil standard, on the balance of probabilities.

LEGISLATION

[45]See Appendix A. Tax Authorities cited and/ or referred to[46]R& J Birkett v HMRC [2017] UKUT 89 (TCC)[47]Carlick Contract Furniture Limited v Commissioner for Her Majesty’s Revenue and Customs [2022] UKFTT 220 TC (Carlick Contract Furniture)[48]Zoe Shisha Events Limited v HMRC [2023] UKFTT 00398 (TC)[49]Kingdom Travel Services Ltd v HMRC [2024] UKFTT 716 (Kingdom Travel)[50]Oral Healthcare Limited v HMRC [2023] UKFTT 00357 (TC) (Oral Healthcare)[51]Bandstream Media and Corporate Communications Ltd [2024] UKFTT 11 (TC) and [2024] UKUT 306 (TCC) (Bandstream Media)[52]HMRC v Hok Ltd [2012] UKUT 363 (TCC) (Hok)[53]Garnmoss Ltd (t/a Parham Builders) [2012] UKFTT 315 (TC); [2012] TC 02001 (Garnmoss)[54]Josoemag Services Ltd v Revenue & Customs [2024] UKFTT 744 TC – re-issued 15 November 2024.

The Appellant’s Submissions

[55]All its claims were submitted transparently and in good faith based on its understanding of the guidance at the time and the furlough grants were passed directly to the employees, aligning with the intent of the scheme.[56]The Appellant cited a number of civil cases referring to HMRC’s lack of duty of care and precedents of negligence. HMRC’s failure to flag discrepancies earlier prevented it from addressing potential errors in real time and allowing corrective action.[57]The Appellant says that HMRC were inconsistent in their handling of the case, taking years to conclude the review, and in resolving the matter which was in any event assigned to multiple caseworkers leading to inconsistency and further delays.[58]The Appellant based its CJRS claims on the adjusted salaries, which reflected the operational realities at the time. These claims were processed and accepted by HMRC without flagging any discrepancies at the time, delaying any opportunity for earlier corrections.[59]It did not hear back from HMRC for nearly two years and, in any event, did not have claims rejected at the outset, in circumstances in which they now say that LL was referring to the wrong reference salaries.[60]Additionally, HMRC now accept that they made an error in their calculations resulting in three assessments and it was not until the independent review that even these calculations were corrected. The Appellant has, accordingly, no confidence that the final calculation is correct.[61]The Appellant says that it provided comprehensive documentation to HMRC to substantiate its CJRS claims, including employee records, payroll reports and other relevant documents which HMRC may not have considered when reaching their conclusion.[62]The Appellant’s calculation of employee salaries was performed accurately and in accordance with what it considered to be HMRC guidelines and it did everything it could to the best of its knowledge and paid its employees the salaries it needed to during the pandemic, when they were most in need of them and when people were fighting for their lives.[63]It adhered to the CJRS guidelines, including proper designation of furloughed employees, accurate salary calculations and timely submissions. Any deviations may be due to inadvertent errors or misunderstanding but the decisions by HMRC do not actually reflect the circumstances and documentation related to its use of CJRS.[64]The Appellant seeks a fair and just resolution in accordance with the CJRS guidelines and has been disadvantaged by the timing of the increase in salaries, for operational business reasons, when this is applied to the Coronavirus Direction and the cut-off date of 19 March 2019.

HMRC’s Submissions

[65]The CJRS was established to provide Support Payments to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus. The scheme allowed a qualifying employer to apply for reimbursement of the expenditure incurred by the employer in respect of the employees entitled to be furloughed under the scheme (para 2.1 of the Schedule to the Coronavirus Direction).[66]Sections 71 and 76 of the Coronavirus Act provided the Treasury with the power to direct HMRC’s functions in relation to coronavirus. Pursuant to these powers, the Treasury introduced the Coronavirus Direction to govern HMRC’s administration of the CJRS on 15 April 2020 (subsequently followed by several updated Directions in relation to CJRS during the pandemic). Validity of the Assessments[67]Paragraph 8(1) of Schedule 16 FA 2020 provides that recipients of Coronavirus Support Payments are liable to income tax if they were not entitled to a Support Payment that they received in accordance with the scheme under which the payment was made.[68]Paragraph 8(4)(b) Schedule 16 FA 2020 provides that in circumstances where the recipient was never entitled to an amount of support payment, income tax is chargeable at the date the Support Payment was received.[69]The amount charged (by the assessment) is equal to the amount of support payment to which the applicant was not entitled to (Paragraph 8(5) Schedule 16 FA 2020).[70]In line with paragraph 9(1) Schedule 16 FA 2020, when an Officer of Revenue and Customs finds that a person has received an amount of coronavirus support payment to which they are not entitled the Officer may raise an assessment.[71]When a person liable to income tax charged under Paragraph 8 of Schedule 16 to FA 2020 is a company that is chargeable to Corporation Tax, then Paragraph 11 also applies. Paragraph 11 sets out how the income tax charge operates in relation to the Company’s calculation of their Corporation Tax liability.[72]Having checked the information held on HMRC’s RTI system and having considered evidence and information provided by the Appellant, Officer Walker identified that CJRS claims had been made that were based on amounts that exceeded the qualifying costs.[73]HMRC submits, based on the testimony of Officer Walker contained within her witness statement, that Officer Walker’s opinion was formed in consideration of the relevant evidence and that her conclusion was a reasonable one.[74]Upon reaching her conclusion, Officer Walker determined that the Appellant was not entitled to receive support payments in the sum claimed. Officer Walker concluded the amount charged would be the overclaimed amount (and not repaid) under paragraph 8(5) Schedule 16 FA 2020 and which was subsequently amended on review.[75]HMRC submits that the assessments were issued to the Appellant correctly under paragraph 9 of Schedule 16 FA 2020.[76]Paragraph 9(2) Schedule 16 FA 2020 states that an assessment may be made at any time, but this is subject to sections 34 and 36 TMA 1970.[77]Section 34 TMA 1970 provides that there is a time limit of four years for raising an assessment. In this case, the first amount of tax became due when the first claim amount was received on 22 May 2020. Assessments were issued on 14 June 2023 and are, therefore, within the statutory time limit. Eligibility of the Appellant[78]HMRC accept that the Appellant was eligible to make CJRS claims.[79]Paragraph 2.1 of the Coronavirus Direction details the purpose of the CJRS: “The purpose of CJRS is to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease”.[80]Paragraph 2.2 of the Coronavirus Direction says:
“Integral to the purpose of CJRS is that the amounts paid to an employer pursuant to a claim under CJRS are only made by way of reimbursement of the expenditure described in paragraph 8.1 incurred or to be incurred by the employer in respect of the employee to which the claim relates.”
[81]Paragraph 3 of the Coronavirus Direction allowed an employer to claim Support payments under the CJRS if they had a PAYE scheme registered on HMRC’s real time information (RTI) system for PAYE by 19 March 2020.[82]‘Qualifying Employer’ is defined at paras 3.1 and 3.2 of the Coronavirus Direction: 3.1 An employer may make a claim for a payment under CJRS if the following condition is met. 3.2 The employer must have a pay as you earn (“PAYE”) scheme registered on HMRC’s real time information system for PAYE on 19 March 2020 (“a qualifying PAYE scheme”).[83]The Appellant had a PAYE scheme registered on HMRC’s real time information (RTI) system for PAYE that was registered before 19 March 2020. Qualifying Costs[84]HMRC’s enquiry and subsequent review determined that the Appellant had overclaimed its qualifying costs.[85]HMRC submits that the sums that it has calculated that the Appellant was not entitled to, result from the Appellant’s failures to calculate the claims in line with the prescribed methods within the Coronavirus Directions.[86]Paragraph 5 of the Coronavirus Direction details the Qualifying Costs an employer is entitled to claim for under the CJRS. This includes Qualifying Costs that relate to an employee: a) to whom the employer made a payment of earnings in the tax year 2019-20 which is shown in a return under Schedule A1 to the PAYE Regulations that is made on or before a day that is a relevant CJRS day, b) in relation to whom the employer has not reported a date of cessation of employment on or before that date, and c) who is a furloughed employee (see paragraph 6) and meet the relevant conditions in paragraphs 7.1 to 7.5 in relation to the furloughed employee.[87]Paragraph 5 of the Coronavirus Direction refers to Schedule A1 to the PAYE Regulations. Paragraph 67B of the PAYE Regulations states that “on or before making a relevant payment to an employee, a Real Time Information employer must deliver to HMRC the information specified in Schedule A1 in accordance with this regulation”.[88]Schedule A1 details what information regarding payments to employees must be given to HMRC. This information includes the date of the payment made and the employee’s pay frequency.[89]This is in accordance with Judge Popplewell’s recent decision in Bandstream Media, where it was held at [11]: “It is clear to us that HMRC are correct that the qualifying costs on which support payments are based are determined by the earnings shown on an RTI return which is made ‘on or before a day that is a relevant CJRS day’. In this appeal the CJRS day is 19 March 2020”.[90]A relevant day is defined by paragraph 13.1 of the Coronavirus Directions as 28 February 2020 or 19 March 2020.[91]Paragraph 6 of the Coronavirus Direction defines a furloughed employee. Paragraph 6.1 provides:
“An employee is a furloughed employee if- a) The employee has been instructed by the employer to cease all work in relation to their employment, b) The period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and c) The instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease.”
Appellant’s claims and calculations Appellant’s claims and calculations[92]HMRC does not contend that the Appellant was not entitled to make any claims for its qualifying costs relating to its employees but does contend that the Appellant made a total of 9 inflated (emphasis added) CJRS claims for 6 furloughed employees that were in excess of the qualifying costs that the Coronavirus Directions allowed the Appellant to claim.[93]Paragraph 8 of the Coronavirus Direction sets out what expenditure can be reimbursed in a CJRS claim. Paragraph 8.2(b) makes reference to an employee’s “reference salary” and instructs consideration of paragraphs 7.1 to 7.15 when calculating this.[94]Paragraph 7.3 of the Direction states:
“In calculating the employee’s reference salary for the purpose of paragraphs 7.2 and 7.7, no account is to be taken of anything which is not regular salary or wages.”
[95]Paragraph 7.4 provides the definition of “regular salary or wages” as follows:
“In paragraph 7.3 “regular” in relation to salary or wages means so much of the amount of the salary or wages as– (a) cannot vary according to any of the relevant matters described in paragraph 7.5 except where the variation in the amount arises as described in paragraph 7.4(d), (b) is not conditional on any matter, (c) is not a benefit of any other kind, and (d) arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions.”
[96]HMRC submits that an employee’s reference salary should be calculated with reference to one of two tests set out in the Coronavirus Directions depending on whether an employee is a “fixed rate” employee.[97]A fixed-rate employee is defined at paragraph 7.6 of the Coronavirus Direction:
“A person is a fixed rate employee if– a) the person is an employee or treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership), b) the person is entitled under their contract to be paid an annual salary, c) the person is entitled under their contract to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”), d) the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary, e) the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and f) the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.”
[98]Paragraph 7.7 of the Coronavirus Direction states that:
“the reference salary of a fixed rate employee is the amount payable to the employee in the latest salary period ending on or before 19 March 2020 (but disregarding anything which is not regular salary or wages as described in paragraph 7.3).”
[99]The enquiry and review applied the reference salary for a fixed rate employee in accordance with Paragraph 7.7 of the Coronavirus Direction, to calculate the monthly salary of five employees of the Appellant, as follows: Employee Monthly Salary @ 19/03/2020 Helen Baxani (HB) £916.66 Shinoj Sabastian Joseph (SSJ) £900.00 Harun Lachiri (HL) £853.84 Angelo Rodriguesg (AR) £916.66 Gabriel Rodrigue Da Silva (GDRS) £800.80 The Appellant deemed Lesley Hurtado, who started employment with them on 1 January 2020, to be a variable rate employee.[100]Paragraph 7.2 of the Coronavirus Direction (and adopted by subsequent Coronavirus Directions) outlines two calculation methods to be used to establish the reference salary of an employee that is not a fixed rate employee. Employers were advised to use the greater of:
“(a) the average monthly (or daily or other appropriate pro-rata) amount paid to the employee for the period comprising the tax year 2019-20 (or, if less, the period of employment) before the period of furlough began, and (b) the actual amount paid to the employee in the corresponding calendar period in the previous year.”
[101]HMRC refers to these two methods as the ‘average’ (para 7.2(a)) or the lookback method (para 7.2(b)) methods.[102]Guidance released by the Government and published on 26 March 2020 stated how to work out the amount of claim for employees whose pay varies: “Employees whose pay varies If the employee has been employed for 12 months or more, you can claim the highest of either the:• same month’s earnings from the previous year• average monthly earnings for the 2019-2020 tax year. If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work until the date they are furloughed. If they have been employed for less than a month, work out a pro rata for their earnings so far, and claim for 80%.”• same month’s earnings from the previous year• average monthly earnings for the 2019-2020 tax year.[103]HMRC submits that the ‘lookback’ method as outlined at Paragraph 7.2 of the 15 April 2020 Treasury Direction does not apply for the employee Lesley Hurtado as she was not employed by the Appellant during the same calendar period in the period spanning March 2019 to December 2019. The calculation used was as follows: Employee Earnings to 19/03/20 Start date Days employed to19/03/2020 Day rate Lesley Hurtado 3702.22 01/01/2020 79 £8.89[104]HMRC also found that Lesley Hurtado’s pay rose to £3,000 following 19 March 2020.[105]The Appellant had not produced evidence to show the agreements to increase wages to the levels demonstrated by its claims. HMRC, therefore, used RTI information held on its systems and used this to establish the correct qualifying costs for all employees. These figures were then deducted from the relevant corresponding incorrect amounts claimed by the Appellant.[106]HMRC’s independent reviewer concluded that the company’s first claim under reference number A88A-86KS started on 19 March 2020. The company confirmed that the claim should have been paid from 01 March 2020 but has provided no evidence to support this. HMRC’s independent officer then concluded that the first claim would therefore start from the day after the cut-off date of 19 March 2020, resulting in the period for the first claim from 20 March 2020 to 30 April 2020.[107]HMRC’s independent reviewer also concluded that the assessments should be revised, resulting in the amount of assessment becoming £80,744.39.[108]HMRC submits that the Appellant’s claims were excessive, did not conform with any methods published and that CJRS claims based on the reference salaries used were incorrect as such salaries were not paid before the relevant date of 19 March 2020.[109]HMRC further submits that it is clear from the calculations and evidence provided by the Appellant throughout the check, that it did not calculate the claims in line with the requirements set out in paragraphs 7.1 to 7.15 of the Coronavirus Direction.[110]HMRC contends that the Appellant’s RTI submissions made prior to the relevant date should have been used to calculate the reference salaries and qualifying costs that could be reimbursed in accordance with Paragraph 8 of the Coronavirus Direction.[111]HMRC contends that the RTI records of the Appellant demonstrate clearly that the claims made were excessive and do not represent the qualifying costs that the Appellant accrued as a result of furloughing their employees during the relevant reference period. It is not disputed that the Appellant did incur some qualifying costs, but these were not to the extent seen in the Appellant’s claims.[112]HMRC contends that the CJRS was not designed to be used for inflated salaries or those not paid before a relevant date or previously submitted to HMRC via a company’s RTI returns. These submissions are supported by the recent case of Kingdom Travel Services at [29] in which Judge Brown states; “The Treasury Directions did not make provision for salary increases either immediately before or during the operation of the scheme. The country was in a time of crisis. The purpose of the schemes were, as stated:
‘to provide for payments to be made to employers … in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.’
The scheme did not provide for the funding of salary increases for employees whilst on furlough.”[113]Judge Popplewell’s comments in Bandstream Media also support HMRC’s contention above at [26]; "It is our view that the purpose of the legislation is, as submitted by HMRC, to cater for the situation which has been suggested by them, at [23] above. It was not intended to allow an employer, after the introduction of the scheme, to inflate an employee’s wages and thus, effectively, have the taxpayer underwrite an employee’s salary. This would drive a coach and horses through the legislation which was designed to fix an employee’s salary to that recorded on the latest RTI submission prior to 19 March 2020. To interpret the legislation otherwise would lead to an injustice".[114]HMRC respectfully requests the Tribunal use their powers under Section 50(6) of the TMA 1970 to vary the assessment under appeal.[115]The quantum of the assessment is the full amount of coronavirus support payment the Appellant is deemed as not being entitled to, in line with Paragraph 8(5) of Schedule 16 FA 2020.

Fair and Just resolution

[116]The Appellant also made reference in the Notice of Appeal to obtaining a ‘fair and just resolution’. HMRC submits that a fair and just resolution is not within the jurisdiction of the Tribunal to decide. It is limited to the legislative provisions of the TMA 1970 which are to decide whether HMRC’s assessments are correct, competent and in time and whether the Appellant satisfied the conditions of the Coronavirus Direction.[117]This point was also specifically considered in relation to CJRS by Judge Poole in the persuasive First-Tier Tribunal case of Carlick Contract Furniture Limited, stating at Paragraph 39:
“as to the Appellant’s argument that the claims were in line with the “spirit” of the CJRS, and it would be unreasonable to exclude them on a technicality such as this, it is clear that this Tribunal has no jurisdiction to entertain such an argument. Its role is to adjudicate on the law and whilst there is some debate about the extent to which “public law” arguments on reasonableness and fairness can properly form part of the Tribunal’s decision-making process in some circumstances, there does not seem to me to be any scope for such argument here, where the Directions draw such a clear bright line to determine eligibility for the scheme.”
[118]Judge Anne Scott also considered the Tribunal’s jurisdiction in the persuasive First-Tier Tribunal case of Oral Healthcare Limited stating at Para 57; “Lastly, for completeness, as we confirmed to Mr Patel in the course of the hearing, whilst we note his argument that the claims were in line with the spirit of the CJRS, in that the employees kept their jobs, nevertheless the Tribunal has no jurisdiction to entertain such an argument. The Tribunal is a creature of statute and has only the powers given to it by statute and must apply the law to the facts.”[119]In relation to fairness, the Upper-Tier Tribunal decided in the case of HMRC v Hok Limited that the First-tier Tribunal does not have jurisdiction to discharge a penalty/assessment which is properly due just because it considers it to be unfair.

Mistake

[120]HMRC notes that in its notice of appeal the Appellant stated; “Any deviations from compliance may be due to inadvertent errors or misunderstanding… There may be a misunderstanding or misinterpretation of our company’s eligibility for the CJRS.”[121]HMRC sympathises with the Appellant’s position in potentially misunderstanding or misinterpreting the legislation. However it is submitted that the legislation does not provide any scope to excuse the appellant for such mistakes. This view is supported in the case of Garnmoss at [12] which states:
“What is clear is that there was a muddle and a bona fide mistake was made. We all make mistakes. This was not a blameworthy one. But the Act does not provide shelter for mistakes…”

Conclusion

[122]HMRC invite the Tribunal to:a. find that HMRC’s assessments were raised correctly and were in time;b. reduce the assessment for the year ending 5 April 2021 to £80,774.39, using their powers under Section 50(6) TMA 1970; andc. dismiss the Appellant’s appeal.[123]HMRC respectfully requests that the Tribunal dismisses the appeal.

TRIBUNAL’S ANALYSIS AND DECISION

[124]Having carefully considered the Appellant’s statement of case prior to the hearing, we explained , as Judge Anne Scott stated in Oral Healthcare Ltd, that “the Tribunal is a creature of statute and has only the powers given to it by statute and must apply the law to the facts.”[125]It was explained at the hearing that the law was set down by Parliament and that a review of the manner in which it had formulated the CJRS legislation was not a matter that was within the tribunal’s jurisdiction.[126]Similarly, that it had been established, shortly after the creation of the First -Tier Tribunal, in HMRC v Hok Limited that the tribunal cannot discharge a penalty or assessment which is properly due just because the tribunal considered it to be unfair.[127]The tribunal has no jurisdiction to consider complaints about HMRC or to consider the inability to pay any assessment which were relevant to the submissions made by the Appellant that HMRC had, in its view,(1) had processed and accepted claims over several months and not identified or notified potential discrepancies until nearly two years after the claims were submitted;(2) repeatedly provided inaccurate assessments dealt with by multiple case workers leading to inconsistencies and creating uncertainty and(3) the financial consequences to the Appellant of the assessment of £80,744. 39, especially given that the employees had now been paid.[128]We explained that the tribunal, being the First-Tier Tribunal, is bound by decisions of the tribunal and higher courts, such as the Upper Tribunal and Court of Appeal, which included cases such as HMRC v Hok Limited, and that our principal function was to establish the fact to ensure that the correct amount of taxes paid within the correct time limits as down in the legislation passed by Parliament.[129]We were in no doubt that the efforts made by the Appellant had beneficially contributed to helping the nation deal with the coronavirus epidemic primarily in the provision of facemasks but also in relation to its other activities and noted that the Appellant had said this had been commended by the King.[130]We accepted that the Appellant acted in good faith and tried as far as was possible to maintain his business and provide employment during the pandemic. The reasons for increasing the salaries of his employees were understandable and plausible in the circumstances but in relation to claiming Support Payments, these would be payable at the appropriate level only if there was compliance with the terms of the Coronavirus Direction or to put it another way, the letter of the law, was followed.

Were HMRC’s assessments, correct competent and in time?

[131]The calculations for the remaining assessment which was the subject of the appeal in an amount of £80,744.39 because of the independent review by HMRC were set out in their review letter of 20 October 2023.[132]We find, notwithstanding that HMRC had also incorrectly calculated two further assessments, that the remaining assessment under appeal was calculated correctly and that HMRC’s final conclusion reached was a reasonable one.[133]We further find that the assessment was correct in applying the terms of the Coronavirus Direction in ascertaining the relevant reference salaries as the amounts payable to the employees in the “latest salary period ending on or before 19 March 2020”.[134]This covered five employees whose monthly salaries ranged from £880.80 to a maximum of £916.66 and who were given increased salaries, albeit payable from 01 March 2020 of £3,000 per month which the Appellant claimed was necessary in order to retain their services and to cope with considerably increased demand for products and because of the move to a new warehouse.[135]There was one employee who was correctly designated as a variable rate employee and we find that the correct method to establish that employee’s reference salary was the ‘average monthly’ basis, being the amount to be paid to the employee for the period comprising the tax year 2019-20 (or if less, the period of employment) before the period of furlough began as the other method of calculation was not applicable based on length of service.[136]This employee start date was 1 January 2020 and the daily rate was £8.89 which was increased to £3,000 per month following 01March 2020.[137]As the Appellant pointed out the timing of the increase in salaries, as from 01 March 2020, was, from its perspective, unfortunate because it made monthly returns to HMRC and accordingly the amount payable in the latest salary period ending on or before 19 March 2020 were the monthly salaries before the increases. We find that HMRC were entitled to use the RTI information held on their systems on or before 19 March 2020 to establish the correct qualifying costs for all employees.[138]The assessment was issued within the statutory time limit of within four years under section 34 of the Taxes Management Act 1970 and we find it was, therefore, ‘in time’.

Whether the Appellant satisfied the conditions of the Coronavirus direction?

[139]A claim for a Support Payment must comply with paragraph 5, 7 and 8 of the Coronavirus Direction.[140]It was accepted that the Appellant’s eligibility as a qualifying employer was met and in terms of paragraph 3 of the Coronavirus Direction an employer could claim support payments under the CJRS if it had a PAYE scheme registered on HMRC’s RTI for PAYE by 19 March 2020. The Appellant had such a PAYE scheme registered..[141]Paragraph 5 details the qualifying costs an employer is entitled to claim for under CJRS. and of relevance to this appeal is: “a) to whom the employer made a payment of earnings in the tax year 2019-20 which is shown in a return under Schedule A1 to the PAYE Regulations that is made on or before a day that is a relevant CJRS day”.[142]Paragraph 5 requires the qualifying employer or RTI employer, to deliver to HMRC the information specified in Schedule A1 including the dates of the payment and the employee’s pay frequency.[143]Paragraph 8 of the Coronavirus Direction sets out what expenditure can be reimbursed. The dispute between the parties was about the relevant date that should have been used to calculate the reference salary and qualifying costs that could be reimbursed in accordance with this paragraph.[144]Paragraph 8.2 set out the amount which can be reimbursed of the gross amount of earnings which must not exceed the lower of £2500 per month and the amount equal to 80% of the employee’s reference salary.[145]The issue between the parties, therefore, is the amount of the reference salaries which we have decided were calculated correctly in relation to the remaining assessment under appeal, which takes us to paragraph 7.7.[146]Paragraph 7.7 states that the “reference salary of a fixed rate employee is the amount payable to the employee in the latest salary period ending on or before 19 March 2020.[147]We were taken to the evidence of the amounts payable in the salary period ending in February 2020 and find that HMRC had correctly identified these as the earnings shown on or before a day that is a relevant CJRS day, which in this appeal is 19 March 2020, and which were the qualifying costs on which the support payments should be based.[148]The nine claims made by the Appellant for six employees were based on the increased salaries and we find they were in excess of the qualifying costs that the Coronavirus Direction allowed the Appellant to claim as set out in the Respondent’s submissions, with which we agreed.[149]As a result of the provisions of the Coronavirus Direction, the Appellant’s claims were based on the reference salaries which were incorrect as the salaries whilst paid before the relevant date of 19 March 2020, were not the reference salaries that are to be calculated in accordance with the provisions of the Coronavirus Direction.[150]Whereas we accepted the picture painted of the circumstances of the coronavirus epidemic as set out by the Appellant, we also agree with and adopt the statement by Judge Brown in Kingdom Travel Services at [29] referred to by the Respondents.[151]SS gave reasons why, in his particular industry, he felt salary increases were necessary. We agree that we do not consider the salaries were increased for no reason but we find that the Appellant was not entitled to the full amount of the Support Payment it requested because of the timing of the increased salaries and the, monthly, method by which it paid its employees and made returns to HMRC.[152]This resulted in its claim being, in terms of the Coronavirus Direction, limited to the reference salaries shown on RTI return which was made “on or before a day that is a relevant CJRS day, namely 19 March 2020, that is to say the sums paid before the salaries were increased and which we find were likely caused by a misunderstanding or misinterpretation of its eligibility for CJRS.[153]HMRC were entitled to recover any CJRS support payments that the Appellant was not entitled to, being £80,744.39, by an assessment to corporation tax in terms of paragraphs 8 and 11 of schedule 16 FA 2020.

Disposal

[154]As stated, we find that HMRC’s assessments were raised correctly and competently and were in time[155]We use our powers under section 50(6) of the Taxes Management Act 1970 to reduce the assessments for the year ending 5 April 2020 to £80,744 39.[156]We dismiss the Appellant’s appeal.

The Right to apply for permission to appeal

[157]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 27th MARCH 2025 Appendix A Legislation Coronavirus Job Retention Scheme - CJRS

Appendix A

[158]As the basis of calculation of claims for Support Payments is of essence to this appeal, the details relating to the scheme are set out in detail.[159]The CJRS was established to provide Support Payments to employers on claims made in respect of their incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus.[160]The scheme allowed a qualifying employer to apply for reimbursement of the expenditure incurred by the employer in respect of the employees entitled to be furloughed under the scheme.[161]Sections 71 and 76 of the Coronavirus Act provided the Treasury with the power to direct HMRC’s functions in relation to coronavirus.[162]Pursuant to these powers, the Treasury introduced the First Coronavirus Direction (“the Coronavirus Direction”) to govern HMRC’s administration of the CJRS on 15 April 2020 (subsequently followed by several Directions that set out modifications to the Coronavirus Direction in relation to CJRS during the pandemic).[163]Under Paragraph 3 of the Coronavirus Direction, an employer could make a claim for Support Payments under CJRS if it had a PAYE scheme registered on the Respondents RTI system for PAYE by 19 March 2020.[164]Paragraph 5 of the Coronavirus Direction detailed the Qualifying Costs an employer was entitled to claim for under the CJRS. This included Qualifying Costs that relate to an employee:
“(i) to whom the employer made a payment of earnings in the tax year 2019- 20 which is shown in a return under Schedule A1 to the PAYE Regulations that is made on or before a day that is a relevant CJRS day, (ii) in relation to whom the employer has not reported a date of cessation of employment on or before that date, and (iii) who is a furloughed employee (see paragraph 6). ”
[165]The term “relevant CJRS day’ was defined at paragraph 13.1:
“a) a day is a relevant CJRS day if that day is (i) 28 February 2020, or (ii) 19 March 2020.”
[166]Paragraph 5 of the Coronavirus Direction referred to Schedule A1 to the PAYE Regulations. This refers to Regulation 67B of the PAYE Regulations which states that “on or before making a relevant payment to an employee, a RTI employer must deliver to HMRC the information specified in Schedule A1 in accordance with this regulation”.[167]Schedule A1 detailed the information regarding payments to employees which must be given to HMRC, including the dates of the payment and employees’ pay frequency.[168]Paragraph 8 of the Coronavirus Direction set out what expenditure could be reimbursed in a CJRS claim. Paragraph 8.1 set out that:
“Subject as follows, on a claim by an employer for a payment under CJRS, the payment may reimburse- the gross amount of earnings paid or reasonably expected to be paid by the employer to an employee; (b) any employer national insurance contributions liable to be paid by the employer arising from the payment of the gross amount; (c) the amount allowable as a CJRS claimable pension contribution.”
[169]Paragraph 8.2 set out that:
“The amount to be paid to reimburse the gross amount of earnings must (subject to paragraph 8.6) not exceed the lower of- (a) £2,500 per month, and (b) the amount equal to 80% of the employee’s reference salary (see paragraphs 7.1 to 7.15).”
[170]Paragraphs 7.1 to 7.15 set out conditions for qualifying costs to be included for variable and fixed rate employees.[171]Paragraph 7.2 set out that:
“Except in relation to a fixed rate employee, the reference salary of an employee or a person treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership) is the greater of- (a) the average monthly (or daily or other appropriate pro-rata) amount paid to the employee for the period comprising the tax year 2019-20 (or, if less, the period of employment) before the period of furlough began, and (b) the actual amount paid to the employee in the corresponding calendar period in the previous year.”
[172]Paragraph 7.3 stated:
“In calculating the employee’s reference salary for the purposes of paragraphs 7.2 and 7.7, no account is to be taken of anything which is not regular salary or wages.”
[173]Paragraph 7.4 provided the definition of “regular salary or wages” :
“In paragraph 7.3 “regular” in relation to salary or wages means so much of the amount of the salary or wages as– (a) cannot vary according to any of the relevant matters described in paragraph 7.5 except where the variation in the amount arises as described in paragraph 7.4(d), (b) is not conditional on any matter, (c) is not a benefit of any other kind, and (d) arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions.”
[174]Paragraph 7.6 defined a fixed rate employee as:
“(a) the person is an employee or treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership), (b) the person is entitled under their contract to be paid an annual salary, (c) the person is entitled under their contract to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”), (d) the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary, (e) the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and (f) the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.”
[175]Paragraph 7.7 stated that: “the reference salary of a fixed rate employee is the amount payable to the employee in the latest salary period ending on or before 19 March 2020”.[176]Paragraphs 8.3 to 8.5 set out that an employer could be reimbursed for the NICs that were paid on the gross earnings under CJRS, but this could not exceed the total amount of employer’s contributions actually paid by the employer for the period of the claim.[177]For the purposes of CJRS, NICs were the secondary Class 1 contributions an employer was liable to pay as a secondary contributor in respect of an employee by virtue of sections 6 and 7 of the Social Security Contributions and Benefits Act 1992 (“SSCBA”) or sections 6 and 7 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (“SSCB(NI)A”).”[178]Paragraphs 8.8 to 8.9 set out that the employer could be reimbursed for the pension contributions to a registered pension scheme.[179]The amount allowable as a CJRS claimable pension contribution under paragraph 8.1(c) was:
“the lower of the contribution payable by the employer in respect of the employee to a registered pension scheme for the relevant CJRS period, and 3% of the part of the gross earnings paid to an employee in a pay reference period that was more than the lower limit for qualifying earnings in that pay reference period (as set out in section 13(1)(a) of the Pensions Act 2008), but not more than the amount claimable by the employer under CJRS in respect of an amount of gross earnings as described in paragraph 8.1(a) in the same pay reference period.”

Modifications to the Coronavirus Direction

[180]There were a further six directions which modified the effect of the Coronavirus Direction so far as applicable to this appeal.

Second Coronavirus Direction dated 20 May 2020

[181]The Second Coronavirus Direction, “modified the effect of” the Coronavirus Direction but the effect of its paragraphs 2, 3, 5, 7, 8 were not modified by the Second Coronavirus Direction. The reference date set out at Paragraph 13.1 was also not altered.[182]Further, conditions in respect of qualifying costs were set out at Paragraph 7 but the determination of fixed and variable rate employees, what was not considered regular salary and wages and how to calculate the reference salary were not altered.[183]Paragraph 12 confirmed that the scheme was extended, and that CJRS had effect only in relation to amounts of earnings paid or payable by employers to furloughed employees in respect of the period beginning on 1 March 2020 and ending on 30 June 2020.

Third Coronavirus Direction dated 25 June 2020

[184]The Third Coronavirus Direction, modified the effect of the Coronavirus Direction and Second Direction (known as “the original Directions”)[185]Paragraph 3 confirmed that the original Directions continued to have effect but were modified as set out in the schedule to this direction which was divided into two parts:

Part 1

[186]Paragraph 1.2(a) set out that Part 1 of the schedule (CJRS having effect from 1 March 2020 to 30 June 2020) extended the time limit for making CJRS claims set out in the Coronavirus Direction.

Part 2

[187]Part 2 of the schedule made provisions in respect of CJRS for the period beginning 1 July 2020 and ending 31 October 2020 and paragraph 7 set out that a CJRS claim might now be made by a qualifying employer in respect of an employee who was flexibly furloughed.[188]Paragraph 18 set out how a reference salary should be determined and for variable rate employees.[189]Paragraphs20.1 and20.2 confirmed that the method of calculating the reference salary for a variable rate employee was as set out at Paragraph 7.2 of the Coronavirus Direction and Second Coronavirus Directions.[190]Paragraphs 21.1 to 21.7 set out further conditions for calculating the reference salary of a variable rate employee but still included what was not considered regular salary and wages.[191]Paragraph 33 set out that the amount that was allowable as CJRS claimable employer NICs was now only referable to a CJRS claim period in July 2020.[192]Paragraph 34 set out that the amount that was allowable as a CJRS claimable pension contribution now only referable to a CJRS claim period in July 2020.[193]Paragraph 41 confirmed the relevant day for the purpose of CJRS was still either 28 February 2020 or 19 March 2020.[194]Further directions were issued on 1 October 2020 (”Fourth Coronavirus Direction”), 12 November 2020 (“Fifth Coronavirus Direction”) and 25 January 2021 (“Sixth Coronavirus Direction”) but the effect of those directions is not relevant to this appeal.

Finance Act 2020 (“FA 2020”)

[195]Paragraph 8(1) of Schedule 16 to FA 2020 made a recipient of an amount of a Support Payment liable to income tax if the recipient was not entitled to the amount.[196]Paragraph 8(4) detailed when income tax became chargeable and, in this appeal, income tax was chargeable at the time the Support Payment was received.[197]Paragraph 8(5) detailed the amount of income tax chargeable as being equal to the amount of Support Payment to which a claimant was not entitled and had not repaid.[198]Paragraph 8(8) stated that in calculating profits or losses for the purposes of corporation tax, no deduction was allowed in respect of the payment of income tax charged under this paragraph.[199]Paragraph 9 afforded HMRC the power to make assessments to income tax as chargeable under paragraph 8 and allowed an Officer to make an assessment where she/he considered that a person had received an amount of Support Payment to which he/she/it was not entitled in an amount which ought, in the Officer’s opinion, to be charged under paragraph 8.[200]Paragraph 11 sets out how the income charge operates in relation to a company’s calculation of their corporation tax liability.

Taxes Management Act 1970 (“TMA 1970”)

[201]An assessment could be made at any time under paragraph 9(2), but subject to the statutory assessing time limits pursuant to sections 34 and 36 of the TMA 1970.[202]When a person liable to income tax charged under paragraph 8 of schedule 16 to FA 2020 is a Company that is chargeable to corporation tax, then paragraph 11 also applied.[203]Paragraph 11 set out how the income tax charge operated in relation to a Company’s calculation of their corporation tax liability.

Income Tax (Pay As You Earn) Regulations 2003 (SI 2003/2682) (“The PAYE Regs”)

[204]Schedule A1 to the PAYE Regulations. Paragraph 67B of the PAYE Regulations state that “on or before making a relevant payment to an employee, a Real Time Information employer must deliver to HMRC the information specified in Schedule A1 in accordance with this regulation”. This information includes information such as the employees name, start date, National Insurance number and payment date.

The Social Security Contributions and Benefits Act 1992 (“SSCBA 1992”)

[205]An employer is liable to pay Class 1 contributions as a secondary contributor in respect of an employee by virtue of sections 6 and 7 SSCBA.

Pensions Act 2008 (“PA 2008”)

[206]Paragraph 13 (1) (a) set out that a person's qualifying earnings in a pay reference period of 12 months, are the part (if any) of the gross earnings payable to that person, in that period, that are more than £6,240.

Cited in 1 later judgment