TC09629 - [2025] UKFTT 01070 (TC)

We heard evidence from Julia Wylie and Harriette Disdale of Cloud Booking on behalf of Smart. Their evidence was based on the missed email from Ian Hallam on 5 November 2020 which had directed them to prepare necessary payroll documentation, including CJRS claims from 1 October 2020. The email confirmed that the directors would be increasing their salaries to £3,250.00 per month.  

Ms Wylie confirmed that the directors received £719.00 on 19 March 2020 by way of salary with other income being withdrawn from the company via dividends.  

The rest of Ms Wylie’s evidence was based around the email from Ian Hallam on 5 November 2020. 

Ms Disdale confirmed that she was furloughed for much of the relevant period and had little involvement with Smart and their CJRS claims.  

We found both witnesses to be honest in their evidence and have taken their account on face value. We note that their account is not disputed by HMRC.  

Ms Valerie Westcott, an officer for HMRC gave evidence on behalf of HMRC. Ms Westcott assisted the tribunal in explaining the error that had been made by Ms McNulty in her review of 11 January 2023. Her evidence was that the initial claims made were correct as the reference date used was 19 March 2020 when each director was receiving £719.00 as a salary.  

This was increased slightly in September 2020 and October 2020 to £732.00. The second lock down began on 1 November 2020. For any new employee the correct reference date would have been 30 October 2020 based on the Coronavirus Directions. However, as each director was already registered for CJRS the correct reference date should have been 19 March 2020. 

HMRC submit that it is irrelevant the £3,250.00 return was submitted before or after October 2020 as the reference salary remained at £719.00 at all times on the basis that the reference date was and remained 19 March 2020 for the directors’ salaries.  

It is further submitted that CJRS does not cover the increase, and this is something that company must cover itself.  

We agree with HMRC’s interpretation of the legislation as is affirmed by the Upper Tribunal in Bandstream Media and Corporate Communications Ltd [2024] TC 09016 at paragraph 26 – 28: 

“[26] It is our view that the purpose of the legislation is, as submitted by HMRC, to cater for the situation which has been suggested by them, at [23] above. It was not intended to allow an employer, after the introduction of the scheme, to inflate an employeeʼs wages and thus, effectively, have the taxpayer underwrite an employeeʼs salary. This would drive a coach and horses through the legislation which was designed to fix an employeeʼs salary to that recorded on the latest RTI submission prior to 19 March 2020. To interpret the legislation otherwise would lead to an injustice. 

[27] Furthermore, notwithstanding the televised debates witnessed by Mr Tann, we cannot allow that to influence our interpretation of the clear language of the statutory provisions. We must look at the actual words used by the legislation and cannot (save in exceptional circumstances which do not apply here) consider the parliamentary debates which preceded the enactment of that legislation. 

[28] So, for the purposes of this appeal, it is our view that paragraph 7.12 does not allow the appellant to claim support payments on the increased salary of £2,500 which it made to Mr Smith during the periods under assessment.” 

 We have seen evidence which clearly shows that the RTI information for each director as at 19 March 2020, was that each director was receiving a salary of £719.00. This is not disputed by Smart. It was not possible for employers to adjust salaries after this date to permit an increased claim under CJRS. 

The Fifth Coronavirus Direction was issued at the beginning of what is commonly known as the second lockdown. Paragraph 11 of the Fifth Coronavirus Direction reaffirms the reference date as being 19 March 2020 (paragraph 11.2) for those in employment on that date (paragraph 11.3). 

Paragraph 11.8 makes it clear that for those whom paragraph 11.3 did not apply, in other words, for those who were not in employment with the company on 19 March 2020, the reference date was to be 30 October 2020.  

As discussed above, both directors were employed immediately before 19 March 2020 and as such this date remained the correct reference date for the purpose of CJRS claims. The initial reviewing officer had erred in permitting the two claims made for a reference salary of £732.00.