T Hilling & Co Ltd t/a Chobham Adventure Farm v The Commissioners for HMRC [2025] UKFTT 704 (TC)

[2025] UKFTT 00704 (TC)Case No TC09552
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 2 June 2025Date Judgment date: 12 June 2025
By remote video hearing
Appeal reference: TC/2023/07534
Coronavirus Job Retention Scheme – clawback of payments – payments made in respect of two employees whose employment had commenced before 19 March 2020, but where the first RTI return to include information about them post-dated 19 March 2020 – payments made to one employee where the first RTI return to include information about them post-dated 30 October 2020 – whether payments to those employees represented “qualifying costs” for the purposes of the Coronavirus Act 2020 and Functions of HMRC (Coronavirus Job Retention Scheme) Direction of 15 April 2020 as amended by subsequent Directions – no – whether appellant entitled to rely on public law arguments – no
Before
TRIBUNAL JUDGE ANNE SCOTTMEMBER NASREEN HUSSAIN
Between
T HILLING & CO LTD t/a CHOBHAM ADVENTURE FARMAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentBean Chapman, Director of the Appellant for AppellantNathaniel Campbell, Litigator of HM Revenue and Customs' Solicitor's Office for RespondentsDECISION

Introduction

[1]This is the appellant’s appeal against assessments to income tax dated 15 September 2022 in the total sum of £28,769.85 for the tax years ending 5 April 2021and 2022. They were issued pursuant to paragraph 9 of Schedule 16 to the Finance Act 2020 (“FA 20”).[2]HMRC request that the Tribunal exercise their power under section 50(6) of the Taxes Management Act 1970 (“TMA”) to decrease the assessment relating to the accounting period ending (“APE”) 31 August 2020 to £8,630.68 and in respect of the assessments for the two APEs 31 August 2021 to increase those to £19,654.95 in terms of section 50(7) TMA. The precise quantum is as set out in the Appendix to HMRC’s Statement of Case.[3]Under the Coronavirus Job Retention Scheme (“CJRS”), the appellant had claimed and received CJRS Support Payments or grants in relation to three employees (“the Employees”)[4]Employers could only claim grant payments for furloughed employees for whom HMRC had received PAYE Real Time Information (“RTI”) in the form of a Full Payment Submission (“FPS”) by specific dates. In summary, for CJRS grants covering periods up to 31 October 2020 the RTI FPS had to be received by 19 March 2020, disclosing the employees’ 2019/20 pay from the employer. For grants covering periods from 1 November 2020 to 30 April 2021 employees must have been included in the RTI FPS submission received by 31 October 2020.[5]HMRC claimed that the failure to include the Employees in the RTI returns on or before 19 March and 30 October 2020 meant that the Support Payments did not qualify under the CJRS and therefore they issued the assessments to claw back the overpayments.[6]With the consent of the parties, the hearing was conducted by video link using TEAMS. 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 in order to observe the proceedings. As such, the hearing was held in public.[7]The documents to which we were referred comprised a Documents Bundle consisting of 568 pages and a Supplementary Authorities Bundle extending to 215 pages. We had Skeleton Arguments for both parties.[8]In the course of the hearing Mr Chapman lodged a two page letter from one of the Employees, Amy, who attended the hearing and briefly gave evidence about the letter. He later lodged:(a) ADML1300 Incorrect Advice to Customers: When incorrect advice can be binding and ADML1400 Incorrect Advice to customers: Detriment from HMRC’s Admin Law Manual dated 25 November 2024.(b) An undated two page document with the HMRC logo and which for ease of reference we call, as did Mr Chapman, “CJRS Common Errors Q&A”.(c) An extract from HMRC Guidance dated 18 August 2022 entitled “Make a late Coronavirus Job Retention Scheme claim” which related to claim periods from 1 November 2020.(d) An HMRC two page document dated 11 March 2021 of unknown origin which was a step by step guide for employers.[9]We heard evidence from both Mr Chapman and Officer Donaldson.

Decision

[10]For the reasons set out below, we dismiss the appeals and vary the assessments as indicated in paragraph 2 above.

The Facts

[11]The appellant is a company which has run a small adventure farm park which includes both indoor and outdoor play areas and animal interaction and education facilities. Prior to the pandemic it employed up to 50 full-time staff and also part-time school and university students. The school students typically worked at the weekends and during the school holidays and the university students worked during the holidays. It was closed during the pandemic.[12]HMRC’s records disclose that the appellant submitted 35 claims for CJRS grant payments from 23 March 2020 until 30 September 2021. The correspondence suggested that the appellant’s payroll company (“JC”) had submitted all of the claims but in a telephone conversation with HMRC on 2 July 2020, Mr Chapman confirmed that JC had cost too much so he wished to submit the claims himself but was experiencing difficulty. He submitted all of the remaining claims, albeit JC continued to manage the payroll and submit the RTI FPS each month. They produced the payslips for the appellant.[13]The Employees in question in this appeal are Amy, Amelia and Anthony. It transpired in Closing Submissions that Anthony was Mr Chapman.

Amy

[14]Amy commenced work with the appellant on 9 March 2020. On Friday 14 and Saturday 29 February 2020 she had visited the appellant to meet the educational lead at the time and she completed three interviews on the latter date for a livestock role. She described those two days as trial days.[15]Both she and Mr Chapman were concerned as to whether or not she would qualify for furlough. They telephoned her former employer at some stage in March 2020 and asked if he would be prepared to furlough her if that was the right thing to do. He assented. They state that they subsequently telephoned HMRC and were told that it would be “OK” for the appellant to furlough Amy because only the appellant could do so; it was not possible for the former employer to do so. They do not know to whom they spoke or when but they are sure that they told HMRC that Amy only started working for the appellant in March 2022. HMRC have been unable to trace any record of that call but there were other calls on 18 March 2020. In evidence Mr Chapman conceded that the call would not have been before that date. Although in correspondence he had argued that JC had called HMRC, he also conceded that he did not know if they had spoken to HMRC about Amy.[16]The first RTI FPS for Amy was filed on 27 March 2020, recorded that her start date was 9 March 2020, her taxable pay was £1,830.77 and she had been paid on 31 March 2020.[17]Her PAYE records disclose that her previous employment which had commenced on 8 May 2018 had ceased on 5 March 2020.

Amelia

[18]In oral evidence Mr Chapman said that Amelia was a university student who had a part-time job near her University and she worked for the appellant during the University vacations. She had therefore been working in December 2019 but had not worked in January or February 2020. She came home for Easter and worked for the appellant in March 2020.[19]However, on closer examination, that is not consistent with the RTI FPS which records that she was employed, and paid, by the appellant in each month from 28 February 2019 until 31 December 2019. Her “Leaving Date” was stated to be 1 December 2019. She recommenced employment on 1 March 2020 receiving her wages on 31 March 2020 and she was again paid every month until 21 March 2021.[20]Furthermore, her PAYE records show that she first worked for the appellant on 3 February 2018 ceasing on 1 December 2019. She had been employed by another company from 12 December 2019 until 6 April 2020.

Anthony

[21]The RTI FPS for Anthony was first received by HMRC on 18 November 2020 and recorded that he had a start date of 21 September 2020 and that the first payment to him had been on 31 October 2020. Mr Chapman’s explanation was that the correct information had been given to JC and they had filed the RTI FPS for the other employees timeously, but they had not filed for him because they had not recognised the name “Anthony Chapman” as an employee. Mr Chapman does not use the name Anthony. When he realised the mistake the RTI FPS for him was lodged, but it was 18 days late.

The Enquiry

[22]On 2 March 2022, Officer Cummins wrote to the appellant opening a compliance check to ensure that the claims for the Employees had met the eligibility conditions. The information requested was in five sections, the second of which read: “Employee information• . their name, address and National Insurance number• . the furlough start and end date• . details of how you calculate their ‘usual’ pay• . how you calculated their furlough pay• . whether you paid your employee at least the amount on the claim and provide evidence of this – for example, a BACS list, payslip or employee signature for receipt of payment• . the number of hours usually worked (CJRS flexible)• . the number of hours worked (CJRS flexible)• . the numbers of hours on furlough (CJRS flexible)• . the employer National Insurance contribution claimed (claims up to 31 July 2020)• . the employer pension contribution claimed (claims up to 31 July 2020)• . the amount paid in pension costs and provide evidence of the amounts paid”.[23]The Officer also asked if there had been any corrections or adjustments to the CJRS claims and requested confirmation that the Employees had all been included in the RTI filing before 19 March or 30 October 2020. He requested an overview of the business and how it had been affected by the pandemic. He asked for the job titles of the Employees.[24]Lastly, he stated “Please provide bank statements for each of the above claims to show the correct claim amounts were paid to your furloughed employees”.[25]On 7 March 2020, Mr Chapman replied giving his telephone number and stating that:
“I don’t have / do not know where to find the Grant numbers you have listed – you already have the info, so not sure why you are asking me for it…?”
. He stated that he did not believe there were any changes to claims and gave a two line account of the business stating that it had been closed during the pandemic.[26]Since the information sought had not been provided, on 25 March 2022, Officer Cummins issued a Notice to provide information and produce documents under paragraph 1 of Schedule 36 to the Finance Act 2008. The attached Schedule of information was in largely identical terms to the information sought in the letter of 2 March 2022. In particular the second section was in identical terms save only that it was preceded by a statement that: “Statutory records or information that we need Statutory records are the records that tax law says a person must keep. We need”.[27]There was again a request for bank statements.[28]Having reviewed the limited information furnished by Mr Chapman, on 4 August 2022 Officer Cummins wrote to him explaining HMRC’s initial findings. That letter explained that the first RTI FPS for each of Amy and Amelia was only received on 27 March 2022, ie after the qualifying date and therefore seven claims in respect of each of them were disallowed. As far as Anthony was concerned, the first RTI FPS was not received until 18 November 2020, ie after the qualifying date being 30 October 2020. Six claims were disallowed as he was not eligible to claim for periods 1 November 2020 to 30 April 2021.[29]The Officer again requested that the appellant supply a list of the amounts claimed for each of the disallowed claims (ie 20 claims in total covering the period 18 March 2020 to 30 April 2021) in order that HMRC could accurately calculate the over-claim and raise the assessment(s).[30]He intimated that HMRC might also charge interest and penalties and enclosed factsheets on penalties.[31]On 13 August 2022, Mr Chapman replied confirming that all of the RTI FPS submissions had been made by JC and he would obtain the information from them. He asked how he could recover the monies from the Employees. The Officer replied explaining to Mr Chapman that the Employees were not liable to repay the Support Payments and that the responsibility for that lay with the appellant because it was the appellant that had made the claims.[32]Mr Chapman’s response on 17 August 2022 was that the appellant was merely a “middle man” and HMRC should recover the monies from the Employees. The officer responded the next day, again explaining that it was the appellant that was liable too repay any overpayment and the Employees were not liable. The appellant was responsible for any inaccuracies.[33]On 31 August 2022 in a telephone call, Mr Chapman confirmed that in relation to Amy, he and JC had called HMRC and “explained the dates etc” and HMRC had said “it would be OK”. The officer undertook to try and identify the calls if further evidence of times and dates was provided.[34]Mr Chapman indicated that Amelia had not left the appellant’s employment but perhaps had a second job and the officer asked for details. In relation to Anthony he said that the RTI FPS was filed before the qualifying date and the officer asked for evidence.[35]Mr Chapman said it was HMRC’s fault for not noting errors at the time and any repayment should come from the Employees.[36]On 9 September 2022, Mr Chapman emailed Officer Cummins confirming that he had spoken with JC and was writing to “clarify and confirm” what he had said in the telephone call. In summary:(a) Mr Chapman explained that Amy had joined the appellant at the end of February 2020 and that the payroll runs from the 21st of a month until the 20th of the following month. He reiterated that that had been discussed with HMRC and he and JC had acted on their guidance. The consequence was that the details for Amy were added to the RTI FPS in the end of March payroll with the other employees.(b) As far as Amelia was concerned, he stated that she had worked for the appellant for more than four years and was still working for the appellant. She had started a new job in January 2020 near her university but that that was a second job. That employee had never ceased working for the appellant. It had been a clerical error stating that Amelia’s second job was the “only job”. Mr Chapman was unable to confirm the identity of the author of the “clerical error”.(c) He said that Anthony joined the payroll on 1 September 2020 because the year end was 31 August. Unfortunately, there had been errors in the RTI FPS filing which was done on time but it was redone after the qualifying day.(d) The RTI FPS by JC were to facilitate the “mid month pay cycle”.(e) Everything had been done within the spirit of the rules at the time as confirmed when both Mr Chapman and JC spoke to HMRC.[37]He enclosed a copy of a letter from JC which, having said that the RTI FPSs were not submitted until the payroll was processed and finalised, went on to say:
“To confirm Chobham Adventure Farm had a mid-month pay circle which runs from 21st to the 20th of the following month but our payroll system cannot accommodate these dates, so although they process/pay from 21st to the 20th of the following month, our system process on a full month basis, but the calculations are processed from 21st to the 20th of the following month.”
[38]In other words, because of the mid-month pay cycle, their systems had not been able to include the first two employees.[39]On 15 September 2022, Officer Donaldson, who had replaced Officer Cummins, issued the assessments which are under appeal and confirmed that the compliance check was now completed. She confirmed that HMRC would not be charging a penalty.[40]She pointed out that “My colleague asked for further evidence to support your explanations…this has not been provided…Without the requested claim amounts, the amounts have been estimated with what could have been claimed for each of the employees”. The assessments were raised on the basis that none of the employees had been included in the RTI FPSs on the relevant dates. In the absence of details of the actual amounts claimed, and paid, for each of the Employees, Officer Donaldson had calculated the “reference salary” (see the legislation at paragraph 58 below) in order to estimate the Employee’s entitlement to the Support Payments had they been included in the relevant RTI FPSs.[41]On 11 October 2022, Mr Chapman emailed HMRC appealing the assessments. He reiterated the information about the Employees that he had provided in the email of 9 September 2022. He stated that he had given all relevant details to JC timeously and it seemed that they “acknowledged they made a clerical error” in relation to Anthony but it was a hectic time. The appellant had simply passed the Support payments to the Employees but they were now being penalised. The appellant had acted in good faith following the Government’s instructions.[42]On 13 October 2022, Officer Donaldson issued her View of the Matter letter confirming that HMRC’s position was unchanged. She also confirmed that no penalty was charged because it was accepted that the correct information had been given to JC.[43]On 18 October 2022, Mr Chapman emailed HMRC disputing the View of the Matter letter stating that:(a) He had submitted all of the correct information within the correct time frames to JC but that he was now being penalised.(b) The Employees were in employment and legitimate claims were made.(c) JC had made an error and HMRC were not giving them any leeway yet presumably the guidance given in the telephone conversation had been an error and that was being ignored. That was unfair.[44]Correspondence ensued and on 15 December 2022, Officer Akbar issued a Review Conclusion letter upholding the assessments.[45]On 2 January 2023, Mr Chapman emailed HMRC expressing dissatisfaction with the review and complaining that HMRC had not used any discretion to show understanding about the matter in a situation where it was the administration of the paperwork that had “let the process down”.[46]On 16 March 2023, Mr Chapman made a late appeal to the Tribunal and HMRC have offered no objection thereto, so in terms of section 49 TMA, the appeal has proceeded.[47]The Grounds of Appeal reiterated (and indeed copied) what had been said in the emails of 9 September and 11 October 2022. It was argued that if HMRC and JC had made mistakes and the appellant had not, they should not be “the only ones being penalised”. The Tribunal was asked to explain how the appellant could get the money back from the Employees.[48]On 10 May 2023, the appellant made an application for Alternative Dispute Resolution (“ADR”) and on 7 June 2023 HMRC accepted same. This appeal was sisted.[49]On 19 September 2023 mediation took place between the parties. The Record of Outcome (“ADR Exit”) stated that: 61.• No resolution agreed. 62.• Chobham Adventure Farm have asked HMRC to apply discretion. 63.• The 19 March 2020 is the date set for RTI submissions and HMRC must abide by that (relevant) date. Para. 13.1 of Treasury Direction made on 15 April 2020, under sections 71 and 76 of the Coronavirus Act 2020, and HMRC have no discretion over this date. 64.• Chobham Adventure Farm’s opinion is that HMRC have not shared the same view that the government have shared with the public regarding the CJRS furlough scheme’s intention. Yvette Hay [HMRC] explained that some individuals who were only employed in February and March 20 and therefore not on an RTI would ‘fall through the cracks’, and therefore not be eligible, but Chobham Adventure Farm is of the opinion that this was not the intention of the legislation.”[50]HMRC’s Statement of Case dated 2 November 2023 intimated the proposed adjustments to the assessments to which we refer at paragraph 2 above.

The Law

[51]Section 76 of the Coronavirus Act 2020 provided that “Her Majesty’s Revenue and Customs are to have such functions as the Treasury may direct in relation to coronavirus or coronavirus disease.” Section 71 of the same Act provided as follows: “71 Signatures of Treasury Commissioners(1) Section 1 of the Treasury Instruments (Signature) Act 1849 (instruments etc required to be signed by the Commissioners of the Treasury) has effect as if the reference to two or more of the Commissioners of Her Majesty’s Treasury were to one or more of the Commissioners.(2) For the purposes of that reference, a Minister of the Crown in the Treasury who is not a Commissioner of Her Majesty’s Treasury is to be treated as if the Minister were a Commissioner of Her Majesty’s Treasury.

The First CJRS Direction

[52]Pursuant to those powers, on 15 April 2020 the Chancellor of the Exchequer signed a Direction, entitled “The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction” (“the First Direction”).[53]The main body of the First Direction, running to just three paragraphs, provided as follows:
“1. This direction applies to Her Majesty’s Revenue and Customs. 2. This direction requires Her Majesty’s Revenue and Customs to be responsible for the payment and management of amounts to be paid under the scheme set out in the Schedule to this direction (the Coronavirus Job Retention Scheme). 3. This direction has effect for the duration of the scheme.”
The substance of the CJRS is then set out in the Schedule to the First Direction.[54]Paragraphs 2.1 and 2.3 read:
“2.1 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.” (Emphasis added)
and “2.3 The claim must be made in such form and manner and contain such information as HMRC may require at any time (whether before or after payment of the claim) to establish entitlement to payment under CJRS.”

and

[55]Paragraph 3 defines qualifying employers (essentially any employer with a PAYE scheme registered on HMRC’s RTI system on 19 March 2020). It is agreed that the appellant meets this requirement.[56]Paragraph 5 of the Schedule is headed “Qualifying costs” and reads:
“5. The costs of employment in respect of which an employer may make a claim for payment under CJRS are costs which – (a) 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), and (b) meets the relevant conditions in paragraphs 7.1 to 7.15 in relation to the furloughed employee.” (a) 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), and (b) meets the relevant conditions in paragraphs 7.1 to 7.15 in relation to the furloughed employee.”
[57]With regard to paragraph 5(a)(i), HMRC refer to the definition of “relevant CJRS day” in paragraph 13.1 of the Schedule which reads:
“13.1. For the purposes of CJRS – (a) a day is a relevant CJRS day if that day is – (i) 28 February 2020, or (ii) 19 March 2020.”
[58]Under the heading “ Qualifying costs – further conditions”, paragraph 7.2 reads:
“7.2 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.”
[59]Paragraph 7.6 sets out when a person is a fixed rate employee and reads:(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.”[60]Paragraph 12 of the Schedule to the First Direction made it explicit that the CJRS would relate to the period 1 March 2020 to 31 May 2020.[61]Subsequent Directions extended the CJRS with some modifications. The relevant Directions are the First to the Sixth Directions. There was a Seventh which extended the CJRS to 30 September 2021 but none of the disallowed claims fall into that period.[62]The Second Direction, dated 20 May 2020, and the Third Direction, dated 25 June 2020, extended the CJRS to 30 June 2020 and 31 October 2020 respectively but the relevant day remained the same, ie 19 March 2020.[63]The Fourth Direction, dated 1 October 2020, imposed a deadline of 30 November 2020 for making claims under the Third Direction.[64]The Fifth Direction, dated 12 November 2020, extended the CJRS to 31 March 2021 and provided at paragraph 6.2(c) of the Schedule that the relevant day for receipt by HMRC of the RTI FPS including the employee’s details was after 19 March 2020 and before 31 October 2020. At paragraph 14 of the Schedule it made provision for calculation of the reference salary of employees other than fixed rate employees. Insofar as relevant, that reads:
“14.1 The reference salary of an employee (or a person treated as an employee for the purposes of CJRS by virtue of paragraph 35.3(a) (member of a limited liability partnership)) who is not a fixed rate employee must be determined in accordance with- (a) paragraph 14.2 in relation to an employee whose relevant reference day is 19 March 2020, (b) paragraph 14.3 in relation to an employee whose relevant reference day is 30 October 2020. … 14.3 The reference salary of an employee (or a person treated as an employee for the purposes of CJRS by virtue of paragraph 35.3(a) (member of a limited liability partnership)) whose relevant reference day is 30 October 2020 is the average monthly (or daily or other appropriate pro-rata) amount payable to the employee in the period- (a) beginning on the later of- (i) 6 April 2020, and (ii) the day when the employee’s employment with the employer began, and (b) ending immediately before the first period covered by a CJRS claim made pursuant to this direction began.” 14.4 The period of time by reference to which an employee’s reference salary is determined in accordance with paragraph 14.2 or 14.3 must be treated as the salary period by reference to which the employee’s reference salary is determined for the purposes of paragraphs 9.6 to 9.8.” (a) paragraph 14.2 in relation to an employee whose relevant reference day is 19 March 2020, (b) paragraph 14.3 in relation to an employee whose relevant reference day is 30 October 2020. (a) beginning on the later of- (i) 6 April 2020, and (ii) the day when the employee’s employment with the employer began, and (b) ending immediately before the first period covered by a CJRS claim made pursuant to this direction began.”
[65]The Sixth Direction is dated 25 January 2021 and extended the CJRS until 30 April 2021.[66]Paragraph 8(1) of Schedule 16 FA 20, provides that a recipient of Support Payments is liable to income tax if they were not entitled to a Support Payment that they received in accordance with the CJRS.[67]Paragraph 8(4)(b) Schedule 16 FA 20, provides that in circumstances where the recipient was never entitled to it, income tax is chargeable at the date the Support Payment was received. The amount charged is equal to the amount of the Support Payment to which the applicant was not entitled. (Paragraph 8(5) Schedule 16 FA 20).[68]Paragraph 9(1) of Schedule 16 FA 2020 provides:
“(1) If an officer of Revenue and Customs considers (whether on the basis of information or documents obtained by virtue of the exercise of powers under Schedule 36 to FA 2008 or otherwise) that a person has received an amount of a coronavirus support payment to which the person is not entitled, the officer may make an assessment in the amount which ought in the officer's opinion to be charged under paragraph 8.”
[69]Section 34 TMA provides that HMRC have a period of four years from the last day of the relevant tax year within which to raise an assessment.

Discussion

[70]It is for HMRC to demonstrate on the balance of probabilities that the assessments were properly and timeously raised. In that regard they must demonstrate that it was reasonable for Officer Donaldson to raise the assessments on the basis that Support Payments had been overpaid.[71]The burden of proof lies with the appellant to demonstrate that, also on the balance of probabilities, the assessments, as amended, are excessive.[72]The appellant has consistently argued that it was far too late for HMRC to check the claims and issue assessments years after the claims were made. As far as timing is concerned we find that HMRC have complied with the statutory time limits in section 34 TMA.[73]We turn now to the merits of the appeal.[74]At the outset of the hearing we explained the limitations of the Tribunal’s powers. Whilst we note Mr Chapman’s 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.[75]In a similar vein, as the Upper Tribunal in HMRC v Hok Ltd [2012] UKUT 363 (TCC) made clear, the Tribunal has no jurisdiction to consider whether or not the law is fair. Accordingly, although we understand that he considers that it is unfair that HMRC have raised the assessments against the appellant, whilst it is the Employees who ultimately received the money, nevertheless that is the law.[76]Quite apart from the issue of fairness, as can be seen, Mr Chapman has repeatedly argued that it is the Employees from whom any repayment should be recovered as the appellant is merely the middleman. That is quite simply not correct.[77]We have added emphasis in paragraphs 54, 62 and 63 above because the law makes it absolutely clear that it is the employer who makes the claim, the Support Payments are paid to the employer who is the recipient thereof and it is the employer who is liable for any repayment. That is the scheme devised by Parliament and neither HMRC nor this Tribunal can take any other approach.[78]The Employees have no liability.[79]We have noted Mr Chapman’s complaints about HMRC’s conduct of the enquiry. In their Statement of Case, HMRC acknowledge that the appellant had raised complaints but correctly state that that is not within our jurisdiction and is a matter for HMRC’s complaints procedure. He has also complained about the litigators having changed during this appeal, HMRC’s conduct during ADR and the ADR Exit and the lack of detail about ADR.[80]Notwithstanding anything he may have been told, as we said to him at the beginning of the hearing, the law in relation to ADR is straightforward and well explained in Ritchie v HMRC [2016] UKFTT 509 (TC). In layman’s terms, to paraphrase, - What happens in ADR, stays in ADR. The only information about ADR that is admissible in a Tribunal is the fact that it happened and the ADR Exit. Accordingly, the partial transcript that Mr Chapman produced cannot be considered by the Tribunal.[81]We have narrated the Outcome in the ADR Exit, and we have explained to Mr Chapman that it is not stating that either party agreed with the other’s position; it simply narrates their respective stances.[82]We can only consider HMRC’s conduct in relation to what happened after the Notice of Appeal was lodged and they consented to the late appeal. HMRC are entitled to change litigators and we observe nothing untoward in their conduct of this appeal.[83]Whilst we note the sterling contributions that the appellant made to assist the community during Covid, the adverse financial consequences of the pandemic and the adverse financial and other consequences if the appeal is dismissed, these are matters that we cannot take into account.[84]We can only apply the relevant law.

Anthony

[85]The most straightforward issues are those relating to Mr Chapman himself (Anthony). JC submitted timeous RTI FPSs for all of the employees except him. We can see that those for both Amy and Amelia were filed on 29 October 2020 in time for the CJRS relevant date the following day. Undoubtedly that was an error or misunderstanding between the appellant and JC. Mr Chapman identified the error and it was rectified on 18 November 2020. That was too late.[86]It is clear that the Directions were drafted with an absolute cut-off date in respect of who counted as an eligible employee.[87]Unfortunately, it is quite clear that payment of earnings to Anthony were not included in an RTI FPS on the relevant date and the law is absolutely explicit in stating that that is a mandatory requirement.[88]HMRC have quoted from other Tribunal decisions such as my own (with Mr Sims) at paragraphs 50 and 51 in Oral Healthcare Limited v HMRC [2023] UKFTT 357 (TC) and Judge Poole at paragraph 37 in Carlick Contract Furniture Ltd v HMRC [2022] UKFTT 220 (TC) which take the same approach. Those decisions are not binding but we agree with them.[89]Although it relates to different legislation, the principle enunciated by Judge Bishopp in the Upper Tribunal decision in Ryan v HMRC [2012] UKUT 9 (TCC) is applicable, ie The purpose of the legislation would be defeated if one could blame an agent; the remedy is to take the matter up with the agent.[90]The fact that the RTI FPS for Mr Chapman was not filed timeously is very unfortunate but it means that there can be no qualifying cost in respect of Mr Chapman.[91]Mr Chapman relied on the documents that he lodged and that we describe at sub-paragraphs 8(c)

(d) above.

[92]Neither can assist the appellant. The late claim guidance states that for claim periods from November 2020, HMRC may accept late claims or amendments if the employer has taken reasonable care to try and claim on time or has a reasonable excuse. Mr Chapman relied on the example of a reasonable excuse where a computer or software failed just before or while the claim was being prepared.[93]Mr Chapman argued that there was a software failure because the software had not recognised him. Firstly, this was not an issue about the claim which is what the guidance refers to and therefore the guidance is not applicable. Secondly, we find that it was not a software failure. It was human failure in terms of input to the software. The RTI FPS was late because JC had not recognised that Anthony Chapman was an employee or the appellant had not explained the position.[94]The step by step guide states at Step 6 that if not enough support has been claimed then the employer will have 28 days after the end of the month to contact HMRC and adjust the claim.[95]The issue with the overpayment arising in respect of Mr Chapman is not the timing of the claim per se, or the amount, involved but the fact that it was invalid so the step by step guide cannot assist.[96]However, we do note the appellant’s attention to Step 6 but by contrast we point out that it clearly states that “If you’re using an agent, ask them to note the claim reference number and share the calculations that form the basis for your claim”. We have added emphasis because it makes it clear that the underlying calculations should be retained by the employer even where an agent is employed. Obviously the corollary of that is that where the employer makes the claim, the employer should retain the calculations.[97]Mr Chapman submitted all but the first two claims but was adamant that neither he nor JC had any information about the quantum of the claims. We will revert to the question of quantum as there are common features for all of the Employees.[98]In summary, as far as Mr Chapman is concerned and the claim in regard to him, we find that HMRC have established that the assessments were properly and timeously raised. Officer Donaldson had reason to believe that there was no relevant RTI FPS and the assessments were made well within the relevant statutory time limits in sections 34 and 36 TMA.[99]We find that the appellant has not satisfied the conditions of the Fifth Direction and, in particular, paragraph 6.2. Mr Chapman had not received a payment which was shown in a RTI FPS before 31 October 2020.

Amelia

[100]As we have indicated the documentary evidence conflicts with the oral evidence. However, we do not consider that to be material.[101]Even if Amelia only worked for the appellant during University holidays (the PAYE records are in conflict with that), she was not employed by the appellant in January and February 2020. There are no RTI FPSs for those months.[102]Far more pertinently, the RTI FTS received by HMRC on 20 December 2019 clearly stated that her employment had ceased on 1 December 2019. As can be seen from paragraph 56 above, paragraph 5(a)(ii) of the Schedule to the First Direction quite clearly states that if a date of cessation has been reported then the employer cannot claim Support Payments. We have emphasised the word “reported” because that is the crucial word so whether or not she ceased employment, as Mr Chapman avers, is not a question that we have to decide, although, on the balance of probability, it seems that she did.[103]JC filed both the December RTI FPS and the first RTI FPS that was filed after her start date on 1 March 2020. It is possible that both were mistakes or careless errors, but the appellant instructed them and they acted as agents for the appellant for filing all of the RTI FPSs and for the first two claims. Sadly for the appellant, it is the appellant that bears the consequences.[104]There is no provision in the legislation for any extension of time or for any remission because of mistakes. There was no entitlement to Support Payments for Amelia because the appellant had not satisfied the conditions of the First Direction and, in particular, paragraph 5(a) (i) and (ii) and therefore the appellant is liable to tax in respect of the overpayment.[105]As is the case for Mr Chapman, we find that HMRC have established that the assessments were properly and timeously raised. Officer Donaldson had reason to believe that there was no relevant RTI FPS, a cessation in Amelia’s employment had been reported and the assessments were made well within the relevant statutory time limits in sections 34 and 36 TMA.[106]We find that the appellant has not satisfied the conditions of the Fifth Direction and, in particular, paragraph 5. Amelia had not received a payment which was shown in a RTI FPS before 31 October 2020.

Amy

[107]It is not disputed that the first RTI FPS for Amy did not qualify.[108]The appellant’s primary argument in relation to Amy is that reliance was placed on a telephone call with HMRC. In oral evidence, Mr Chapman stated that the call would have been made after 18 March 2020 and, on or before 27 March 2020, being the date the RTI FPS was filed but he could be no more precise than that.[109]We accept Amy and Mr Chapman’s evidence that they had telephoned the previous employer who had offered to furlough Amy “if that was the right thing to do” and that they telephoned HMRC in that regard. We also accept that HMRC will certainly have told them that the previous employer could not do so since Amy was no longer their employee and was employed by the appellant.[110]As Mr Campbell pointed out, when Mr Chapman referenced Euro London Appointments Limited v HMRC [2024] UKFTT 996 (TC) (“Euro”), Judge Rudolf recorded at paragraph 21 that it was only on 26 March 2020 that the Government published their Guidance on claiming through the CJRS. Incidentally, we observe that 26 March 2020 was the day lockdown measures came into force. The First Direction was only published on 15 April 2020.[111]The significance of that is that

Judge Rudolf went on to say, at paragraph 22 in Euro that the Guidance stated that:

“Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme. (emphasis added)”
[112]Amy was only hired after 28 February 2020 so if the call was on 26 or 27 March 2020 the answer to any question about CJRS would have been that she would not have been eligible. If it was before that, on the balance of probability it is inherently unlikely that there would have been any discussion about eligibility for Support Payment since the Guidance was still being formulated.[113]In any event, as we have indicated at paragraph 17 above, Amy’s previous employment only ended on 5 March 2020. It was only on 15 April 2020 that the relevant CJRS day became 19 March 2020. The Guidance was then updated. HMRC’s Guidance was first published on 20 April 2020.[114]We do not accept Mr Chapman’s assertion that HMRC have wilfully failed to trace the call. Mr Campbell said that HMRC had searched for telephone calls from Mr Chapman and had only been able to trace the ones in the bundle. It would have been in HMRC’s interests to have traced the call since that would have disclosed what had been said by both Mr Chapman and HMRC and when. We observe in passing that in correspondence there was no mention of Amy having been present for the call and rather the suggestion had always been that JC were involved (see paragraphs 15 and 33 above); that is not material for the reasons set out below.[115]In relation to the appellant’s reliance on the call, Mr Chapman relied on the documents we describe at paragraph 8(a) and (b) above. In essence he says that the appellant acted on incorrect advice given by HMRC. All we know about that advice is that the appellant, and Amy, believed that the advice was that Amy should be furloughed by the appellant and not her previous employer. Our findings in fact narrate all that HMRC, or we, have been told about that call.[116]As far as the CJRS Common Errors Q&A is concerned, although Mr Chapman relied on one particular question and answer, he did not refer to the context. The document is entitled “Common errors in the calculation of CJRS grants questions and answers”. It goes on to say that it gives “an indication of HMRC’s approach to customers who have calculated grants using a different method to that set out in HMRC’s guidance”.[117]We are not concerned with the calculations done by either JC or the appellant. The issue is eligibility for the CJRS grant or Support Payment.[118]For completeness we narrate the question and answer on which Mr Chapman relied. It reads: “Q If an employer has acted on incorrect HMRC advice do they have to make a correction? If an employer speaks to an adviser even via webchat, and• were asked questions by HMRC• provided HMRC with an honest answer• have received unambiguous advice and evidence this. The customer can stand by that and a correction does not have to be made. HMRC was clear that customers didn’t need to look through the legislation and could rely on HMRC advice and guidance. This is on a customer-by-customer basis and cannot be applied more widely. Example The employer contacted the HMRC CJRS webchat service. The employer explained to the HMRC adviser that one of the employees was not on the RTI by the relevant deadline, explaining that this was due to an administrative error and that the employee had been on previous years RTI submissions. Employer also explained that tax and NIC had been fully paid in the period on which the employees claim would be calculated if they had been on the RTI. The HMRC adviser manually processed the claim for the employee even though they were ineligible under the scheme rules. Company does not need to correct the error in this circumstance as they sought advice and the HMRC adviser told them that they could make a claim for the employee, providing that HMRC can verify the information from the call from its records and evidence from the employer.”• were asked questions by HMRC• provided HMRC with an honest answer• have received unambiguous advice and evidence this.

Example

[119]Mr Chapman had highlighted only the question and the penultimate paragraph of the answer. We do not find that to be of assistance. This is not a question of a correction. The third bullet point is important. Mr Chapman kept no contemporaneous note. We do not even know whether HMRC asked any questions and the appellant has been unable to evidence the call beyond that which we have recorded. Further this is on a customer-by-customer basis. The example relates to completely different facts where the employee had been on previous RTI FPSs. There was an administrative error. There was no administrative error in Amy’s case. She would never have been on a RTI FPS before 19 March 2020 because JC’s systems could not do that.[120]The ADML1300 and 1400 come from HMRC’s internal manual advising their staff what to do where incorrect advice has been given. He did not produce, but also referred to, “CRG3200 -Mistakes: Misleading advice: whether a mistake” which comes from the same source and has the same purpose.[121]We observe that CRG3200 explains that there are problems where there is no documentary evidence and the taxpayer is relying on an unrecorded telephone conversation that took place some time ago. It says that:
“Memories inevitably fade over time and interpretations of what was said may vary…In many cases, there won’t be any evidence apart from what the customer and staff member recall…”
. It then says that in those circumstances the complaint should not be upheld. In this case we do not even have the name of the staff member. This document does not assist.[122]Relying on the ADML1300 and 1400, in summary, the argument was that HMRC should consider themselves bound by their incorrect advice because the appellant had suffered “real and significant detriment” as a result of the application of correct statutory position and that would be considered by the Courts to have constituted an abuse of power by HMRC.[123]Mr Campbell rightly argued that, at best, reliance on these documents was an argument based on legitimate expectation. We agree. Mr Chapman had relied upon a quotation in paragraph 69 in Euro where Judge Rudolf quoted from and relied upon paragraphs 47 and 48 in Treasures of Brazil Limited v HMRC [2024] UKFTT 00929 (TC). That quotation read:
“In addition, the Appellant can only rely on legitimate expectation if HMRC's conduct is ‘conspicuously’ unfair or ‘so outrageously unfair that it should not be allowed to stand’ (see R v Inland Revenue Commissioners ex parte Unilever Plc [1996] STC 681 at [697]).”
[124]However, disregarding for now the question as to whether HMRC’s alleged failure to admit to a mistake or giving incorrect advice was so very unfair, that has to be read in context. The preceding part of the quotation reads: “The principles the Tribunal should apply in determining whether the Appellant had the required legitimate expectation are those set out by the High Court in R v Inland Revenue Commissioners, ex parte MFK Underwriting Agencies Limited [1990] 1 WLR 1545 at [1569]: (1). The first requirement is that the taxpayer should put all their cards face upwards on the table. (2). The second requirement is that ‘the ruling or statement relied upon should be clear, unambiguous and devoid of relevant qualification’”.[125]Since we do not know the detail of what was said and by whom in the telephone call those criteria are not met.[126]However, we do not need to consider that quotation in any detail since, as Mr Campbell rightly pointed out, Judge Rudolf went on to analyse the relevant law in the context of the CJRS and at paragraph 80 found that “Even assuming the taxpayer could establish a legitimate expectation we would not have jurisdiction to allow an appeal on that basis.”[127]We agree with and adopt both his analysis and his conclusion. We do not have jurisdiction and that ground of appeal does not succeed.[128]As is the case for Mr Chapman and Amelia, we find that HMRC have established that the assessments were properly and timeously raised. Officer Donaldson had reason to believe that there was not a relevant RTI FPS, and the assessments were made well within the relevant statutory time limits in sections 34 and 36 TMA.[129]We find that the appellant has not satisfied the conditions of the Fifth Direction and, in particular, paragraph 5. Amelia had not received a payment which was shown in a RTI FPS before 31 October 2020.

Quantum

[130]Section 50(6)(c) TMA provides that an assessment stands good unless it is established that there has been an overpayment or underpayment and the appellant bears the burden of proof in relation to that.[131]Unfortunately for the appellant, it is argued that HMRC cannot and should not use estimates. That is incorrect. All taxpayers are required to keep statutory records in order to support their accounts, returns and claims. As we have pointed out at paragraph 92, the HMRC guide to making claims for CJRS states that even where an agent is used, the employer should have a record of the underlying calculations.[132]Mr Chapman did not keep a record of his own calculations and said that neither he nor JC had a record of the claims. He blamed that on the fact that when using the Government Gateway it was not possible to save or store the information.[133]The law is clear and paragraph 2.3 of the Schedule of the First Direction (see paragraph 54 above) states that it is for the employer to establish entitlement to payment and the employer must provide information to HMRC before or after the claim has been paid.[134]At every step HMRC has explained to the appellant that they needed information to verify the claims. For example, that is why they asked for copy bank statements.[135]The appellant did not respond to the informal request for information on 2 March 2022 nor the formal Statutory Schedule 36 Notice or the reminder on 4 August 2022.[136]As we have explained at paragraph 40 above, when issuing the assessments, Officer Donaldson pointed out to the appellant that the information had not been provided and therefore since she did not know the exact amount of the claims she had had to estimate the Employees’ entitlement in respect of the Employees in terms of the legislation.[137]The appellant’s stance throughout has been that HMRC should have known the amounts because it would have been the amount shown on the payslips; they had the information. The officer has never seen the payslips. Furthermore, that is not consistent with Mr Chapman’s explanation that in his case he had not claimed the full entitlement of Support Payment but had instead drawn part of his salary in addition.[138]In any event that is not the point. The appellant had a legal requirement to provide the information sought by HMRC and Mr Chapman should have known that.[139]We point out that the first paragraph of the Schedule 36 Notice states:
“This letter is an information notice. It legally requires you to give us the information and / or documents we ask you for”
. The appellant did not comply and must bear the consequences. In this case we accept that the estimates underpinning the assessments may very well be more than the amounts actually claimed but that is the inevitable result of the failure to keep records or produce information.[140]The appellant has not established that the recalculation of the assessments in the Statement of Case is incorrect.[141]As requested by HMRC we vary the assessments in the amounts specified by HMRC.

Disposition

[142]For all these reasons the appeal is dismissed and the assessments are varied to £8,630.68, 17,300.11 and £2,254.84 being a total of £28,285.63 instead of £28,769.85.

Right to apply for permission to appeal

[143]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. ANNE SCOTT TRIBUNAL JUDGE Release date:12th JUNE 2025