TC09629 - [2025] UKFTT 01070 (TC)

The relevant legislation is, The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction, – dated 15 April 2020 (“The Coronavirus Direction”). 

Paragraph 2 of the direction succinctly explains it purpose: 

“2.1The purpose of CJRS is to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.  

2.2

Integral to the purpose of CJRS is that the amounts paid to an employer pursuant to a claim under CJRS are only made by way of reimbursement of the expenditure described in paragraph 8.1 incurred or to be incurred by the employer in respect of the employee to which the claim relates.” 

Whilst the wording for the purpose was amended over the various amendments, the intention of supporting employers remained through-out. 

Regard is had to the following paragraphs which explain the way request for payments were to be calculated: 

“7.1

Costs of employment meet the conditions in this paragraph if- 

(a)

they relate to the payment of earnings to an employee during a period in which the employee is furloughed, and  

(b)

the employee is being paid-  

(i)

£2500 or more per month (or, if the employee is paid daily or on some other periodic basis, the appropriate pro-rata), or  

(ii)

where the employee is being paid less than the amounts set out in paragraph 7.1(b)(i), the employee is being paid an amount equal to at least 80% of the employee’s reference salary.  

7.2

Except in relation to a fixed rate employee, the reference salary of an employee or a person treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership) is the greater of-  

(a)

the average monthly (or daily or other appropriate pro-rata) amount paid to the employee for the period comprising the tax year 2019-20 (or, if less, the period of employment) before the period of furlough began, and  

(b)

the actual amount paid to the employee in the corresponding calendar period in the previous year.   

7.3

In calculating the employee’s reference salary for the purposes of paragraphs 7.2 and 7.7, no account is to be taken of anything which is not regular salary or wages.  

7.4

In paragraph 7.3 “regular” in relation to salary or wages means so much of the amount of the salary or wages as-  

(a)

cannot vary according to any of the relevant matters described in paragraph 7.5 except where the variation in the amount arises as described in paragraph 7.4(d),  

(b)

is not conditional on any matter,  

(c)

is not a benefit of any other kind, and  

(d)

arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions. 

… 

7.7

The reference salary of a fixed rate employee is the amount payable to the employee in the latest salary period ending on or before 19 March 2020 (but disregarding anything which is not regular salary or wages as described in paragraph 7.3) (emphasis added).” 

The Coronavirus Direction was updated a few times in varying ways; however, the reference salary date remained as 19 March 2020 until the amendments of 12 November 2020 (the “Fifth Coronavirus Direction”), the relevant parts of which provided:  

“11.1

Paragraphs 11.2 and 11.8 determine an employee’s relevant reference day for the purposes of an employee’s reference salary and usual hours.  

11.2

The relevant reference day in relation to an employee to whom paragraph 11.3 or paragraph 11.5 applies is 19 March 2020.  

11.3

This paragraph applies to an employee if-  

(a)

the employer making the CJRS claim made a payment (“the payment”) to the employee,  

(b)

the payment was reported to HMRC pursuant to paragraph 22 of Schedule A1 to the PAYE Regulations in a return that the employer is required to deliver in accordance with regulations 67B or 67D of those Regulations, and  

(c)

the return mentioned in paragraph 11.3(b) was delivered to HMRC on or before 19 March 2020.  

11.4

In determining whether paragraph 11.3 applies to an employee-  

(a)

a return is delivered to HMRC on the day that the return is received by HMRC;  

(b)

a payment made to an employee reported to HMRC in a return delivered to HMRC on or before 19 March 2020 must be disregarded if-  

(i)

the employee’s employer has reported to HMRC a cessation of the employee’s employment,  

(ii)

the cessation of the employee’s employment occurred after the making of the payment, and  

(iii)

the cessation of the employee’s employment occurred on or before 23 September 2020. 

11.5

This paragraph applies to an employee if the employee’s employer- 

(a)

has made a CJRS claim in relation to the employee by virtue of a relevant provision, and 

(b)

has not reported to HMRC a relevant cessation of the employee’s employment. 

11.6

The following are relevant provisions for the purposes of paragraph 11.5(a)- 

(a)

paragraphs 9.1 to 11.3 of the first CJRS direction; 

(b)

paragraphs 9.1 to 11.3 of the second CJRS direction; 

(c)

paragraphs 37.1 to 39.3 of the third CJRS direction. 

11.7

For the purposes of paragraph 11.5(b), a cessation of an employee’s employment is a relevant cessation of an employee’s employment if it occurred- 

(a)

after the period covered by the CJRS claim mentioned in paragraph 11.5(a) (or the latest of such claims if more than one has been made), and 

(b)

on or before 23 September 2020. 

11.8

The relevant reference day in relation to an employee to whom neither paragraph 11.3 nor paragraph 11.5 applies is 30 October 2020.”