TC09605 - [2025] UKFTT 00957 (TC)

The Appellant made 18 CJRS claims totalling £92,835 under Finance Act 2020. The Support Payments related to 11 employees, including three directors.

HMRC opened an enquiry into the payments on 28 November 2022 and requested information. The Appellant did not provide the information and HMRC issued information notices under schedule 36 to the Finance Act 2008. On 24 February 2023, the Appellant sent an email saying that its payroll contractor had gone out of business and the relevant documents were no longer available. The Appellant did provide spreadsheets and payslips relating to the furloughed employees and, in addition, confirmation of Full Payment Submissions for the three directors.

On 5 September 2023 HMRC made income tax assessments, sent to the Appellant on 6 September, under paragraph 9 to recover Support Payments made to the Appellant to which HMRC considered it was not entitled. Under paragraph 9(2) and section 34 Taxes Management Act 1970, assessments may be made within four years of the end of the tax year to which they relate and the assessments are accordingly in time.

HMRC originally made three assessments totalling £92,835 in respect of Support Payments made to the Appellant by reference to eleven employees including three directors. The assessments were for £18,042.50 for the Accounting Period ended 31 October 2020, £36,845.00 for the tax year ending 5 April 2021 and £37,947.50 for the tax year ended 5 April 2022. HMRC also issued penalty assessments to the Appellant pursuant to schedule 41to the Finance Act 2008 as applied by paragraph 13 of schedule 16 in the amount of £46,417.50.

HMRC subsequently decided that the claims in respect of the directors were correct and are only pursuing the Support Payments made in respect of the other eight employees (the Employees). We are asked to reduce the assessments accordingly to £0, £,25,000 and £26,875, or £51,875 in total. HMRC are no longer defending the penalties.

The Appellant appeals against the (original) assessments and penalties.

The Appellant employed the eight new Employees from September 2020 in an attempt to rebuild its business and claimed Support Payments in respect of the Employees from 1 November 2020 until September 2021 which were paid to the Employees.

Between January 2020 and May 2021, the Appellant outsourced its payroll to a third-party payroll company, Cherries Financial Services Ltd (Cherries). Cherries were engaged to maintain accounting records and payroll, submit RTI returns to HMRC and prepare and submit CJRS claims based on data provided by the Appellant.

The Supplementary Bundle contained a long email chain between Mr Dziomdziora and Cherries in which Mr Dziomdziora constantly chased Cherries and asked for documentation relating to CJRS and payroll which Cherries stated they had sent. It is clear that the Appellant had sent Cherries the necessary documents and Cherries confirmed that they had made the submissions. We accept that the CJRS claims were made in good faith.

The Appellant imposed deadlines on Cherries to produce confirmation of the payroll and CJRS submissions which were not met and ultimately, on 31 May 2021, Mr Dziomdziora terminated the Appellant’s contract with Cherries. In his statement, Mr Dziomdziora stated that it was not until the end of the 2020/21 tax year that the Appellant discovered Cherries’ failings.

In fact, Cherries did not send any documents or returns at all to HMRC.

The first RTI in respect of the Employees was made on 18 June 2021, outside the qualifying periods (between 19 March 2020 and 3 March 2021) (“the qualifying period”).

The RTI was ultimately submitted by the Appellant. Officer Chong explained that HMRC’s systems showed that HMRC had never received any documents, reports or communications from Cherries and confirmed that the RTI sent on 18 June 2021 was sent by the Appellant.