TC09642 - [2025] UKFTT 01116 (TC)

We find the following facts from the bundle and the evidence presented to us by the two witnesses. Further findings of fact are set out in the discussion below in the relevant context.

CSEL is a company, based in Bournemouth, that started as a general building company but, by the time in question, had developed a specialism in fitting, upgrading and refurbishing spas, steam rooms, saunas etc. They had specialist staff who were quick and efficient. CSEL had contracts with large national organisations to do this kind of work on a repeat basis because CSEL could get the jobs done quickly during the client’s down time or off-periods.

The work was project based and therefore sporadic. Sometimes they had contracts that lasted for 3 months and then other times there was no work for a month or so.

Most of their employees were from Eastern Europe and, when there was no work, they would return to their home countries, returning at short notice when a new contract came in.

The employees had contracts under which they were paid a fixed day rate for the days that they worked, but they were not paid (other than holiday or sick pay) for days when there was no work. This was described as a “zero-hours contract”.

In the period running up to the beginning of the Coronavirus pandemic CSEL had obtained a new contract for a national holiday park business. It had been expected to start in November or December 2019 but was delayed by the holiday park business. Mr Gullick’s evidence was that this was not uncommon in the industry.

The employees went home and were not paid their day rate during this time.

On 14 January 2020, CSEL sent letters to five of its employees outlining their rates of pay and responsibilities for the holiday park contract which was, at that time, due to start on 3 February 2020, but this was subject to confirmation.

The work commenced on or around 2 March 2020.

The workers were paid their salary covering this work period in the 31 March 2020 payroll.

The workers were furloughed from 23 March 2020.

CSEL made 17 claims under the CJRS amounting to £100,934.88 for the period from 23 March 2020 until 31 July 2021.

These claims related to 6 employees – 5 spa engineers and 1 administrative member of staff. There is no dispute regarding the administrative member of staff, who was paid a fixed weekly salary. The remainder of this decision concerns only the claims in relation to the 5 spa engineers.

A compliance check into the CJRS claims was opened by HMRC on 22 September 2020.

After a series of requests for information, which CSEL complied with, on 15 March 2021 HMRC put a hold on further CJRS pay outs and stopped any further claims from being made.

On 22 April 2021 HMRC issued an assessment, in the sum of £70,119.60, for the accounting period ending 27 October 2020, tax year ended 5 April 2021 (Assessment 1).

On 29 April 2021 HMRC wrote to the Appellant stating that this assessment had been withdrawn.

On 28 October 2021, HMRC sent two assessment notices to the Appellant in the sum of £51,249.68 for the accounting period ended 27 October 2020, tax year ended 5 April 2020 (Assessment 2) and £28,236.42 for the accounting period ended 27 October 2021, tax year ended 5 April 2021 (Assessment 4).

On 28 October 2021 HMRC made another Assessment in the sum of £51,249.68 for accounting period end 27 October 2021, tax year ended 5 April 2021. This was created on HMRC’s systems but was not notified to the Appellant (Assessment 3).

On 12 November 2021, CSEL made appeals against Assessments 2 and 4. Within this appeal letter, errors in the tax years referred to in the Assessment correspondence were identified.

On 24 November 2021, HMRC responded to CSEL. This letter apologised for the error and issued revised Notices of Assessment with the correct year. These were dated 23 November 2021. The letter also explained that HMRC “is not yet in a position to accept an appeal request” and stated that a view of the matter letter would be issued in due course. It also offered a review of the decision. The revised Notices of Assessments also included sections explaining the appeal and review options.

On 14 July 2022, HMRC issued a letter to CSEL. In its skeleton argument, HMRC submitted that this letter was a “view of the matter letter” (VOTM). The face of the letter does not use this phrase and it gives very scant detail of HMRC’s view of the matter. It then, again, offers CSEL a review of the decision or the option of appealing to the Tribunal.

On 3 August 2022, CSEL requested a review.

On 24 August 2022, HMRC sent a letter explaining that the 14 July VOTM had been invalid because there had been no appeal against the assessments issued on 24 November 2021. HMRC treated the 3 August 2022 letter requesting a review as a late appeal and accepted it. HMRC then set out its view of the matter in identical terms to the 14 July 2022 letter.

After repeated extensions of time to complete their review, HMRC issued their review conclusion letter on 18 November 2022. This conclusion upheld the principle of the decision, but amended the amounts said to be overclaimed.

On 9 December 2022, CSEL appealed to the Tribunal.

In May 2023, CSEL applied to be admitted into alternative dispute resolution (ADR). ADR was not successful in resolving the issues.

A further delay ensued in June and July 2024 when HMRC explained to CSEL that Assessment 1 had been erroneously withdrawn and Assessment 3 had never been notified to them. CSEL duly appealed against both of these assessments to this Tribunal (after going through the necessary HMRC appeal and VOTM process).