Citycom Systems Ltd v The Commissioners for HMRC [2025] UKFTT 862 (TC)

Neutral Citation: [2025] UKFTT 00862 (TC) Case Number:TC09580

FIRST-TIER TRIBUNAL

TAX CHAMBER

Hearing Heard on: 24 th March 2025

Date Judgment date: 17 July 2025

Taylor House, London

Appeal reference: TC/2024/02459

INCOME TAX – assessments – Coronavirus Job Retention Scheme support payments – the Coronavirus Direction 15 April 2020 – paragraph 9 of schedule 16 to the Finance Act 2020 – sections 34 and 36 of the Taxes Management Act 1970 – whether payments claimed were excessive – appeal dismissed

Before

TRIBUNAL JUDGE J LEE

TRIBUNAL MEMBER DR P MANN

Between

CITYCOM SYSTEMS LTDAppellant

THE COMMISSIONERS FOR HIS MAJESTY’SRespondent

REVENUE AND CUSTOMSRespondent

Mr Rehman Khan, director of the Appellant for Appellant

Ms Beverley Levy, litigator of HM Revenue and Customs’ Solicitor’s Office and Legal Services for Respondents

DECISION

Introduction

[1]This is an appeal by the Appellant (“Citycom Systems Ltd”) against assessments in respect of income tax issued by HMRC under paragraph 9, schedule 16 of the Finance Act 2020 (“FA 2020”) to recover Coronavirus Job Retention Scheme (“CJRS”) payments made to the Appellant for the accounting periods ended (“APE”) 31 July 2020, 2021 and 2022, which HMRC alleges were incorrectly claimed.

[2]The total amount under appeal is £37,884.88. The assessments were issued on 28 June 2023 and are as follows: Accounting period end Tax year Date of issue Amount Charged 31/7/2020

5/4/2021

28/6/2023

£6,555.10

31/7/2021

5/4/2021

28/6/2023

£19,370.68

31/7/2021

5/4/2022

28/6/2023

£6,648.03

31/07/2022

5/4/2022

28/6/2023

£5,311.07 Total tax due: £37,884.88

[3]For the purposes of this appeal, we have considered two document bundles, one prepared by HMRC, and another prepared by the Appellant. We have had the benefit of skeleton arguments from both parties. We have heard oral evidence from Mr Rehman Khan, a director of the Appellant, and from Officer Benjamin Creighton on behalf of HMRC, together with extensive oral submissions from both parties. We are grateful to them.

Background

[4]The Appellant is a company that was incorporated in August 1998. According to Companies House, it undertakes management consultancy activities (other than financial management). The Company has two directors, Mr Rehman Khan and Mr Amjad Khan.

[5]The Appellant made several claims for Coronavirus support payments under the CJRS covering the period 1 April 2020 to 30 September 2021. There were 18 claims in total, with the first having been made on or about 6 May 2020, relating to two employees, Mr Rehman Khan and Mr Amjad Khan (who are also the directors).

[6]On 13 May 2021, HMRC wrote to the Appellant to advise that they were opening a check into the Appellant’s claim through CJRS and requesting certain information. It appears that the letter was not received by the Appellant, as it had been posted by HMRC to an address in Birmingham (and not the Appellant’s registered office address).

[7]On 24 September 2021, HMRC sent an email to the Appellant’s tax agent or accountant stating that HMRC were conducting an enquiry into the Appellant’s CJRS payment claims. The letter initially sent on 13 May 2021 was re-issued to the Appellant on 27 September 2021, addressed to the Appellant at its registered office.

[8]On 1 October 2021, the Appellant provided HMRC with a response to its queries. In relation to the question as to how the Appellant calculates the usual pay of their employees, and their furlough pay, the Appellant stated as follows:

“Details of usual pay are arrived at by experience in the consultancy industry, amount of leads generated, type of work undertaken, number of hours worked or available to work, billable time and day to day management of company. Furlough pay is calculated using a similar methodology.”

[9]On 17 December 2021, Mr Rehman Khan telephoned HMRC. The officer (Officer Helen Hollins) explained that they could not accept the method used by the Appellant for calculating the CJRS payments claimed. Mr Khan stated that it may have been a mistake, and that their salaries fluctuated based on the health of the business. He asked if they would be able to negotiate the amount due. The officer explained that a reduction was not possible and that they would send their view of the matter letter, and if the Appellant had any more evidence to be considered, that could be provided. A note of this telephone conversation is in the bundle.

[10]On 17 December 2021, HMRC issued their preliminary “view of the matter” letter (dated 20 December 2021), explaining that HMRC had completed their checks and that the method adopted by the Appellant to calculate the claims could not be accepted as it was not in compliance with the rules governing the scheme, as contained in the Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Directions of 15 April 2020 (“the Coronavirus Direction”).

[11]In their letter, HMRC also explained the workings of the Coronavirus Direction, that it had relied on the data recorded in “Real Time Information (“RTI”) as submitted by the Appellant to HMRC, and that the correct calculation of each employee’s reference salary was as follows:(a) £690 for Mr Amjad Khan;

(b) £330 for Mr Rehman Khan, save for January 2021, which was £600. As a result of the Appellant using an incorrect method to calculate the amounts claimed, contrary to the provisions of the Coronavirus Direction, HMRC determined that there was a total overclaim of £37,884.88.

[12]On receipt of the letter, Mr Rehman Khan telephoned HMRC to query the calculations. The officer explained that there was guidance on the “gov.uk” website and that on the claim system itself, which stated that a claim must be 80% of an employee's “usual” salary. The Appellant stated that he did not receive any guidance, that he only saw the form once, and that his accountant filed the forms. HMRC stated that he must have told his accountant what to file for the purposes of RTI submissions and the CJRS claims. The Appellant stated that he worked on a 4-year cycle pay wise and had based his figures on that. The officer explained they had looked at his self-assessment returns and he had not paid himself that much in 19/20, nor in 18/19. The Appellant asked why HMRC had not contacted him sooner to raise any issues about the Appellant claiming too much. The officer explained that HMRC were unable to check every claim and that the onus remained on the taxpayer to ensure that accurate information was provided, as with all other tax returns. The Appellant asked if there was any way to reduce the amount that would have to be repaid. He was advised that once HMRC had raised assessments, he could speak to the “Time to Pay” team.

[13]On 14 January 2022, the Appellant emailed a detailed letter in response to HMRC’s letter of 20 December 2021. The key issues raised were that HMRC had failed to check that the Applicant was eligible to claim, that no or inadequate controls were in place, that the CJRS grant tool was unfit for purpose, that no factsheets or guidance were provided at any time during the application process, and that HMRC should have alerted the Appellant to any issues with its CRJS claims sooner. The Appellant also requested information regarding “test data and controls/safeguards” placed on its CJRS claim.

[14]On 11 April 2022, HMRC (Officer Hollins) responded to the Appellant’s letter. The letter stated (amongst other matters) that:

“There were numerous updates and press briefings published in the run up to the scheme which made it clear that employers were entitled to claim 80% of their employees’ usual monthly salary up to a maximum of £2500. It was based on the PAYE salary declared to HMRC and was not to include dividend income. Your first CJRS claim was not filed until 6 May 2020 and gov.uk had regular updates on how to calculate your usual salary. There were also numerous prompts throughout the application process that stated the claims were to be based on your usual monthly salary. https://webarchive.nationalarchives.gov.uk/ukgwa/20200415165650/https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme, which was published before your claim was filed, shows how much an employer can claim.”

[15]The officer confirmed she would be raising the assessments and explained that once the assessments were raised, the Appellant could appeal.

[16]On 10 August 2022, a different HMRC officer, Officer Creighton, having taken over the Appellant’s case, wrote to the Appellant to advise that he would be reviewing their case in early September upon his return from leave and would be in touch.

[17]On 11 January 2023, Officer Creighton wrote to the Appellant having reviewed all the papers. The officer advised that he had calculated the reference pay which should have been used for the CJRS claims based on RTI data as submitted by the Appellant, setting out what he believed should have been the correct amounts claimed for each employee in each claim period from 1 April 2020 to 30 September 2021, and what amount he believed was payable by way of assessments to HMRC to recover the amounts that the Appellant had overclaimed. The letter sets out the following:

“In our letter of the 20 December 2021, it was advised that the employees pay would be worked out from a reference point of the 19 March 2020. Both Mr Rehman Khan and Mr Amjad Khan were employed on this date and had been for over a year prior to this point. This means that under the Treasury Direction made on 15 April 2020 under Sections 71 and 76 of the Coronavirus Act 2020 for staff that have the same pay every month 80% of the pay can be claimed up to a maximum of £2,500 or staff that have variable pay they can claim 80% of the average pay for the tax year before the 19 March 2020 or 80% of the corresponding month whichever is higher. The full Treasury directive can be found at 210415_CJRS_DIRECTION_No_7_for_publishing.pdf https://assets.publishing.service.gov.uk/media/60784cf6e90e076f490199f8/210415_CJRS_DIRECTION_No_7_for_publishing.pdf . Alternatively, you can also look at the CJRS online calculator by searching CJRS at www.gov.uk. • Using this I have based the calculation on the following reference pays. Mr Amjad Khan £690, as the submitted real time information (RTI) for the 2019/20 tax year shows £690 each month. • Mr Rehman Khan, as the pay varies for the employee between £300 and £600 per month on the 10 RTI submissions that have been made before the cut off point of the 19 March 2020. Using the averaging method this would make the average monthly pay £330 which is the reference pay I have used apart from the claim for January 2021 where I have used £600 as the look back method is the higher as the pay for January 2020 was £600.”

[18]The Appellant was given a month to respond. On 3 February 2023, the Appellant emailed HMRC a copy of their letter dated 14 January 2022 and a further letter dated 3 February 2023. This letter highlighted that the Appellant had made an FOI request for a copy of the test data and controls/safeguards linked to their CJRS claim and were awaiting a response.

[19]On 23 February 2023, HMRC’s FOI team sent their response to the Appellant, essentially stating that HMRC were prohibited from releasing the information under the applicable legislation.

[20]On 29 June 2023, with no further information having been provided by the Appellant, HMRC issued four notices of assessment to recover the amounts of CJRS payments received by the Appellant which HMRC submit were excessive. The assessments have been summarised above in paragraph 2.

[21]On 1 November 2023, Officer Denise Turner emailed the Appellant, following on from the Appellant’s call to another department, to explain that she was the new case worker and that no appeal has been received by HMRC against the assessments.

[22]On 3 November 2023, the Officer sent further copies of the assessments to the Appellant. The Officer explained that the appeal period had ended and if the Appellant wished to make a late appeal, they should do so immediately with reasons for their appeal and reasons for it being late.

[23]On 10 November 2023, the Appellant sent HMRC a letter of complaint, expressing disappointment that its appeal had not been lodged with the Tribunal, and that it was still waiting for information about the controls/safeguards placed on its CJRS claim which had previously been the subject of its FOI request.

[24]On 13 November 2023, HMRC email the Appellant and asked for a copy of the original appeal to the Tribunal. The Appellant emailed HMRC the same day a copy of the letter they had previously sent dated 3 February 2023.

[25]On 16 November 2023, HMRC emailed the Appellant in response, explaining that the letter that had been provided was the FOI request from February 2023 (which HMRC had already responded to) and was not an appeal against the assessments raised in June 2023. The appeal process was explained again to the Appellant.

[26]On 5 February 2024, HMRC emailed the Appellant and explained that their complaint would be dealt with in due course, but that no appeal had been received by HMRC against the assessments issued in June 2023.

[27]On 7 February 2024, the Appellant emailed HMRC three letters, two of which had previously been sent to HMRC. The third letter set out the reasons for the Appellant’s appeal, as follows: “The reasons listed again for the appeal are the same as my previous communication: 1. HMRC will check you are eligible to claim before making payment to the bank account you provided in 6 working days. 2. On receipt of the claim, there was a 72-hour risking and relevant controls window, in which HMRC CJRS assessed claims: i. Only making grants for employees and businesses using data held on HMRC systems; ii. CJRS claims to be flagged which differ from PAYE data they hold; iii. Designing the CJRS scheme in a way that prevented ineligible claims from being made and blocked suspicious claims from payment up front; iv. Using HMRC’s extensive knowledge of customer behaviors and compliance to make an informed assumption of the error risk; v. Investing in post-payments compliance to identify and contact claimants within agreed standards and actions to minimize errors within CJRS scheme; vi. whether the pattern of RTI filings and claims is broadly in line with what they expect; vii. HMRC Management Information System (CJRS and RTI) for analysis and data modelling techniques; viii. HMRC to use its `Connect’ computer system to flag anomalies in claims. My application for CJRS grant failed to undergo the following steps:• HMRC CJRS did not check that applicant was eligible to claim;

• No award notice or assessment was sent to the applicant;

• No factsheet was provided at any time in the application process;

• No relevant controls which were available but not used in the risking window, or in subsequent releases of the CJRS schemes;

• 21 months had passed before claimant informed that there was a problem with his CJRS claim;

• Due to incorrectly determining status CJRS grant tool was not `fit for purpose`. 3. Failure to handle my claim within the agreed standards and actions to minimize errors within CJRS scheme, highlighting any opportunities to pick up any errors - which is contrary to the claimants’ rights and obligations.” i. Only making grants for employees and businesses using data held on HMRC systems; ii. CJRS claims to be flagged which differ from PAYE data they hold; iii. Designing the CJRS scheme in a way that prevented ineligible claims from being made and blocked suspicious claims from payment up front; iv. Using HMRC’s extensive knowledge of customer behaviors and compliance to make an informed assumption of the error risk; v. Investing in post-payments compliance to identify and contact claimants within agreed standards and actions to minimize errors within CJRS scheme; vi. whether the pattern of RTI filings and claims is broadly in line with what they expect; vii. HMRC Management Information System (CJRS and RTI) for analysis and data modelling techniques; viii. HMRC to use its `Connect’ computer system to flag anomalies in claims.

[28]On 9 February 2024, HMRC issued their “view of the matter” letter, setting out the amounts HMRC had calculated to be the correct amount the Appellant was entitled to claim, and the amount that had been overclaimed in each claim period. HMRC also stated that “it is generally HMRC’s policy to handle claims on a process now, check later basis” and that guidance stated that HMRC reserved the right to retrospectively audit a CJRS claim. The Appellant was offered a review or to take their appeal to Tribunal if they did not agree with HMRC’s decision.

[29]On 20 February 2024, the Appellant emailed HMRC stating that it wished to appeal to the Tribunal.

[30]On 21 February 2024, HMRC’s complaints team wrote to the Appellant, partially upholding the Appellant’s complaints, accepting that there were delays with HMRC dealing with the FOI request and apologising for any confusion caused. HMRC stated that the FOI request was not, however, an appeal against the CJRS assessments.

[31]On 22 February 2024, HMRC emailed the Appellant to advise that should it wish to appeal to the Tribunal, it would have to lodge the appeal itself.

[32]On 12 March 2024, the Appellant emailed HMRC to advise that it had lodged its appeal with HMCTS. On 3 April 2024, the Tribunal emailed the Appellant asking for a copy of the decision letter from HMRC. The Appellant responded on 7 April 2024. Further emails were exchanged between the Tribunal and the Appellant and, on 14 May 2024, the Tribunal notified HMRC of the appeal. HMRC does not object to the late appeal.

[33]The grounds for appeal in the notice of appeal states:

“My application for CJRS grant failed to undergo the following steps: HMRC CJRS did not check that applicant was eligible to claim; No award notice or assessment was sent to the applicant; No factsheet was provided at anytime in the application process; No relevant controls which were available but not used in the risking window, or in subsequent releases of the CJRS schemes; 21 months had passed before claimant informed that there was a problem with his CJRS claim; Due to incorrectly determining status CJRS grant tool was not 'fit for purpose·. Failure to handle my claim within the agreed standards and actions to minimize errors within CJRS scheme, highlighting any opportunities to pick up any errors - which is contrary to the claimants' rights and obligations in 'what you expect from HMRC' included within the HMRC Charter. The activity on the claim should have led to a review and customer contacted. This should be done to safeguard any funds as a precaution, whilst the internal investigation took place. As a regulated government department, CJRS are subject to certain regulatory obligations to delay or withhold transactions ·and services. Safeguards which are in place, but were not activated, either at the outset or anytime as detailed in the HMRC Customer Retail Agreement. I have requested copies of the test data which HMRC CJRS is relying upon to prove these claims multiple times over the last couple of years and am still awaiting.”

Issues

[34]The issue which the Tribunal will need to determine is whether the assessments are correct, competent and in time. This inevitably requires determination as to whether paragraphs 5, 7 and 8 of the Schedule to the Coronavirus Direction are satisfied, which set out the costs of employment which can be claimed under CJRS and how the costs of employment should be calculated when making a claim.

[35]The onus is on HMRC to satisfy the Tribunal that the Appellant did not satisfy the conditions of the Coronavirus Direction and is therefore liable to an income tax charge under paragraph 8 of the FA 2020, as assessed under paragraph 9.

[36]The onus then shifts to the Appellant to demonstrate that they have been overcharged by the assessments.

The Legal Framework

[37]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 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.

[38]Pursuant to sections 71 and 76 of the Coronavirus Act 2020, the Treasury introduced the Coronavirus Direction to govern HMRC’s administration of the CJRS on 15 April 2020 (this was followed by a number of updated Directions during the pandemic).

[39]The applicable Direction to each of the Appellant’s claims are set out in the attachment labelled “Appendix A” to HMRC’s statement of case for this appeal.

[40]Under paragraph 3 of the Coronavirus Direction, an employer can make a claim for support payments under CJRS if they have a PAYE scheme registered on HMRC’s Real Time Information (“RTI”) system for PAYE by 19 March 2020.

[41]Paragraph 67B of the Income Tax (Pay As You Earn) Regulations 2003 (“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”. Schedule A1 details what information regarding payments to employees must be given to the Respondents. This information includes the date of the payment made and the employee’s pay frequency.

[42]Paragraph 5 of the Coronavirus Direction refers to Schedule A1 of the PAYE Regulations.

[43]Paragraph 5 of the Coronavirus Direction also details “qualifying costs” an employer is entitled to claim for under the CJRS. This includes “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;

[44]A relevant day is defined by paragraph 13.1 of the Coronavirus Direction as 28 February 2020 or 19 March 2020 (the latter date applies in this case).

[45]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.

[46]An employee’s reference salary is calculated with reference to one of two tests set out in the Coronavirus Direction depending on whether an employee is a “fixed-rate” employee or not. A fixed-rate employee is defined at paragraph 7.6 of the Coronavirus Direction as follows:

“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), the person is entitled under their contract to be paid an annual salary; (b) 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”); (c) the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary; (d) 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 (e) the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.”

[47]Paragraph 7.7 of the First Coronavirus Direction further 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).”.

[48]Paragraph 7.2 sets out the calculation methods to be used when the employee is not a fixed-rate employee:

“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.” (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.”

[49]Paragraph 7.3 further states:

“In calculating the employee’s reference salary for the purposes of paragraphs 7.2, no account is to be taken of anything which is not regular salary or wages.”

[50]Following the First Coronavirus Direction, several further directions were issued. It is not necessary for us to set out these further directions, which have no direct relevance to the issues in this appeal.

[51]Paragraph 8 of Schedule 16 to FA 2020 makes a recipient of CJRS support payments liable to income tax where a claim is made incorrectly. Paragraph 8(4) details when income tax becomes chargeable and, in this appeal, income tax is chargeable at the time the payment was received as HMRC states that the parameters of entitlement were not satisfied at the outset of the claim.

[52]Paragraph 8(5) details the amount of income tax chargeable as being equal to the amount of support payment to which the applicant was not entitled and has not been repaid. In addition, and as regards Corporation Tax computations, no deduction is allowed in respect of the payment of income tax under paragraph 8(8).

Discussions and Findings

[53]We have considered the documents in both bundles, as well as the specific documentary evidence to which we were referred. We have also reflected carefully upon the oral evidence from Mr Rehman Khan for the Appellant and from Officer Creighton for HMRC.

[54]There is no question that the Appellant met the eligibility criteria for claiming CJRS as set out in the Coronavirus Direction. The issue central to this appeal is whether the amounts claimed in the periods 1 April 2020 to 30 September 2021 were excessive, which entitled HMRC to issue assessments to recover the alleged overclaimed amounts.

[55]All findings of fact have been made on the civil standard of proof (on the balance of probabilities). That means that they were reached on the basis that they are more likely to be true than not. The following is not intended to address every point of evidence or resolve every contention made by the parties. We have made the findings necessary to resolve the appeal before us. Where findings have not been made, or have been made in less detail than the evidence presented, that reflects the extent to which those areas were relevant to the issues and the conclusions reached.

Whether the assessments are correct, competent and in time

[56]The provisions in paragraph 7 of the Schedule to the Coronavirus Direction are highly relevant. Those provisions set out the costs of employment which can be claimed under CJRS and how the costs of employment should be calculated when making a claim (depending on whether an employee is a fixed-rate employee or not).

[57]We find that Mr Amjad Khan was a fixed-rate employee. In the 2019/20 tax year, he was paid a fixed amount each month of £690.00 and it was correct for HMRC to have deemed him to be a fixed-rate employee, pursuant to paragraph 7.6 of the Coronavirus Direction. We accept HMRC’s calculation that his reference pay was £690 each month.

[58]We find that Mr Rehman Khan was not a fixed-rate employee. His pay varied between £300 and £600 per month. With varying wages, we accept HMRC’s contention that Mr Rehman Khan cannot be deemed as a fixed-rate employee and was a ‘variable-rate’ employee for claim purposes, by virtue of paragraph 7.2 of the Coronavirus Direction. We also accept HMRC’s calculations as to his reference pay. Relying on the 10 RTI submissions made before the cut-off point of 19 March 2020, using the “averaging” method, this would make his average monthly pay £330, apart from the claim for January 2021, when £600 was adopted using the “look back” method (which produced a higher figure than the “averaging” method).

[59]We find that the CJRS claims submitted by the Appellant did not accord with the relevant provisions of the Coronavirus Direction. The Appellant has not provided a satisfactory response to explain the basis of the amounts claimed. Its letter of 29 September 2021 to HMRC stated that their “usual” pay was arrived at “by experience in the consultancy industry, amount of leads generated, type of work undertaken, number of hours worked or available to work, billable time and day to day management of company” and that a similar method had been used to calculate the CJRS claims. That is not an acceptable method pursuant to the Coronavirus Direction.

[60]We reject the Appellant’s contention that no guidance was available at the time it submitted its claims. The Appellant’s first claim was not filed until 6 May 2020 and by then, the “gov.uk” website had been updated on how to calculate an employee’s reference pay. Guidance was first published on 26 March 2020 and updated on 15 April 2020.

[61]The link to this guidance, as at 15 April 2020, was set out in Officer Hollins letter to the Appellant of 11 April 2022: https://webarchive.nationalarchives.gov.uk/ukgwa/20200415165650/https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme. That link directs one to a web archive of the relevant guidance, as of 15 April 2020. That guidance contained a section titled “How much you can claim”, with instructions for full or part-time employees on a salary, and also for employees whose pay varies, as follows:

“Full or part time employees on a salary Claim for the 80% of the employee’s salary, as in their last pay period prior to 19 March 2020. If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim. 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 earning 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%.”

Employees whose pay varies

[62]The guidance published on 12 June 2020 also set out detailed guidance on how much could be claimed, and included an online “calculator”.

[63]It became apparent from the Appellant’s own evidence during the hearing that there was no reasonable basis for the amounts claimed, which bore little resemblance to the salaries paid to either employee in the period prior to March 2020. The claims were for higher amounts and were not calculated in compliance with the Coronavirus Direction.

[64]Mr Rehman Khan accepted in his evidence that he had not checked the “gov.uk” website prior to the Appellant’s first claim. He stated that he had simply relied on “what was available in the media” and had relied entirely on HMRC to pick up any errors. When asked about what steps had been taken by him to check what could be claimed, he stated that, at the time, there was a lot of poor information, the media was saying something and the Chancellor during his interviews was saying something else, but the information he had taken was that the claim could be a maximum of £2,500 and that the company needed to be trading. He reiterated his view that HMRC should have contacted him if the claims were not correct.

[65]We find it surprising that the Appellant did not take any steps to check the “gov.uk” website for guidance as to what could be claimed, or indeed take any other steps to seek advice on the issue from HMRC or their own accountant. This is all the more surprising in circumstances when it was said by Mr Khan that there was much misinformation/ conflicting information in the media about what could be claimed at the time.

[66]We are cognisant of the Appellant’s argument that HMRC should have checked the claims and notified the Appellant of any errors made more promptly. However, this ground does not assist the Appellant. Ultimately, the responsibility lay with the Appellant to ensure that the amounts claimed were correct, in line with the provisions of the Coronavirus Direction. The fact that HMRC did not notify the Appellant that it was making enquiries about the claims until late September 2021 (the first letter dated 13 May 2021 not having been received by the Appellant) is not a valid defence and does not absolve the Appellant from having to pay income tax referrable to the CRJS payments to which they are not entitled.

[67]Paragraph 9(2) of Schedule 16 FA 2020 states that an assessment may be made at any time by HMRC, but subject to sections 34 and 36 TMA 1970.

[68]Sections 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 claimed amount was received on 6 May 2020. The assessments were issued on 28 June 2023. Payments were in the 2020/2021 and 2021/2022 tax years, so four years after the earliest tax year would be 5 April 2025. The assessments were therefore raised by HMRC within the statutory time limit.

[69]Pursuant to paragraph 8(5) Schedule 16 FA 2020, the quantum of the assessments should be equal to the amount of the CJRS payments that the Appellant is deemed as not being entitled to. We have considered the assessments and the calculations that underpin them. We are satisfied that the assessments have been issued for the correct amounts. Nothing has been produced by the Appellant to demonstrate that it has been overcharged.

[70]In light of our findings above, we find that assessments are correct, competent and in time.

Other matters

[71]The other matters raised in the Appellant’s notice of appeal, in its letters to HMRC, and in its skeleton argument, such as the complaint that HMRC allegedly failed to handle the claims “within the agreed standards and actions to minimise errors within the CJRS scheme”, or the fact that HMRC have not provided the “test data”, do not fall within the remit of the Tribunal and have no bearing on the issue which we have had to determine.

Conclusion

[72]For the reasons set out above, the appeal is dismissed.

Right to apply for permission to appeal

[73]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. TRIBUNAL JUDGE J LEE TRIBUNAL MEMBER DR P MANN Release date: 17th JULY 2025