TC09642 - [2025] UKFTT 01116 (TC)

For variably paid employees HMRC submits that the reference salary should be calculated in accordance with Paragraph 7.2 of the CJRS Direction. HMRC further submits that this paragraph is clear that both methods of calculating reference salaries for variable paid employees should be based on amounts paid, not amounts to be paid.

The average amount should be calculated by averaging amounts paid to an employee between 06 April 2019 (or the day they commenced employment if they were not employed by the claimant company on 06 April 2019) and the day before they were furloughed. This could be achieved by calculating a daily, weekly or monthly wage or salary.

HMRC therefore submits in the case of CSEL employees that this period is 06 April 2019 to 22 March 2020 (being that the first claim to CJRS was from 23 March 2020).

The new wages that CSEL had agreed to pay their employees under the new contract were not paid because the employees did not start work on that project until early March 2020. Therefore, although work was started, the employees had earned the salary but had not been paid that salary.

Salaries which had been earned by the employees for work done between 01 March 2020 and 22 March 2020 on the new contract were not used or considered, because these did not form part of what the employees had been paid before they were furloughed. HMRC submits that this is the correct position based on the CJRS Direction.