TC09606 - [2025] UKFTT 00958 (TC)

HMRC submits that DPL received excessive amounts under the CJRS in relation to two employees, Mr Langan and Ms G.

The amounts claimed were excessive because they were not claimed in accordance with paragraphs 3, 5, 7 and 8 of the CJRS Direction.

HMRC accepts that:

HMRC consider that the claims were made for amounts in excess of the qualifying costs under paragraphs 5 and 7 of the CJRS Direction.

HMRC submit that Mr Langan and Ms G were “fixed rate employees” because they were in receipt of fixed rate weekly salaries prior to 19 March 2020.

Under Paragraph 7.7 of the CJRS Direction, the reference salary to be used is the amount that was payable to the employee in the last salary period prior to 19 March 2020 and that these were the lower amounts of £100 for Mr Langan and £191.23 for Ms G.

HMRC submit that the increases to the higher amounts were not submitted to HMRC until 11 April 2020, which is after the employees’ relevant reference day of 19 March 2020.

HMRC submit that for these employees the relevant reference salary is calculated under paragraph 7.1(b)(ii), because both employees were receiving less than £2500 a month. HMRC submit that both employees were receiving an amount “equal to at least 80% of the employee’s reference salary” because they were receiving all of their reference salary, being the lower amount they were being paid as at 19 March 2020.

HMRC submit that for paragraph 7.12 to be relevant, the employee would have to first have been paid less than 80% of the amount which he was required to have been paid under paragraph 7.1(b)(ii). However, this condition was not met, because they were being paid all of their reference salary.

HMRC submits their view that Paragraph 7.12 allows a claim to be made if initially an employer could not afford to or did not pay the employee the minimum amount required (80% of the reference pay) in the latest salary period prior to 19 March 2020 but rectifies this by making a further payment within the specified time limit. Therefore, this paragraph ensured that a fair reference pay of what was payable/paid ‘normally’ to the employee would be maintained.

HMRC argues that Bandstream Media supports their case, in particular paragraphs 23 to 26.

Applying the same reasoning, HMRC contend that Paragraph 7.12 cannot be used to increase the reference salary after 19 March 2020 for the purpose of CJRS.

HMRC consider that they have raised a valid assessment within the relevant time limits, namely within 4 years of the first claim that was made on 19 April 2020.

HMRC contend that the assessment for the tax year ended 5 April 2021 should be increased because CJRS grants were reduced to 60% of the reference salary for CJRS claims in October 2020, however the decision making officer used 70% in the calculations. In addition, the reviewing officer found that the first three claims from 19 April to 31 July included the cost of employer NICs and as the Appellant claimed employment allowance, they could not claim for these amounts under the CJRS in accordance with Paragraph 8.4 of the first CJRS Direction: