UT (Tax & Chancery) UT-2024-000098 - [2025] UKUT 00247 (TCC)

The Respondent submitted that the FTT did not err in law in its decision to allow the appeal regarding the First SEISS Claim. He argued that the FTT applied the statutory framework and relevant principles properly in the context of the evidence and official guidance available at the time.

The Respondent relied on an argument as to the inconsistency in HMRC’s position. While they now assert that the Respondent’s ineligibility was clear from the outset, he suggested that HMRC did not act in accordance with that alleged clarity at the time. The Respondent, like many others, received communications from HMRC inviting him to claim SEISS, communications that he contends implicitly confirmed his eligibility or, at minimum, gave no warning of possible ineligibility. He contended that if the rules were as clear-cut as HMRC now claims, it is difficult to understand why they failed to prevent claims by those they deemed ineligible. HMRC cannot reasonably expect individual claimants to interpret eligibility more accurately than HMRC’s own automated communications and frontline systems.

In response to Ground 1, the Respondent submitted that the FTT correctly quoted and considered the statutory provisions, including paragraphs 3.2 and 4.2 of the First SEISS Direction, and applied them to the facts as found. The FTT acknowledged that while the Respondent had incorporated a limited company (Machinegun Web Development Ltd), he had continued to carry out the same work as before, and his understanding of his employment status was shaped by HMRC's guidance.

He argued that the FTT was entitled to consider HMRC's SEISS guidance as a relevant interpretive aid, particularly in light of the guidance’s ambiguity at the time of the First Claim on 18 May 2020. The explicit statement excluding limited company directors from eligibility was only added on 13 May 2020, five days before his First Claim. The guidance before that did not clearly exclude individuals in the Respondent's position.

The Respondent noted that HMRC argues that both the legislation and the initial guidance made it clear that individuals in the Respondent’s position were not eligible for relief and that this should have been obvious even before that update. Nonetheless, he contended that such a position ignores the real-world situation of claimants. HMRC employs full-time professionals who interpret legislation; the Respondent is not a legal nor tax expert, nor should he be expected to act as one. Most public members rely in good faith on government guidance and not all have access to qualified advisers. He argued that the assumption that a layperson could or should have understood complex statutory requirements more clearly than the government's evolving guidance is unrealistic and legally unreasonable.

The Respondent submitted that he took advice from an accountant and relied on HMRC's published guidance in good faith. The FTT's reasoning in allowing the First Claim was based on the legislative context, the guidance available, and the Respondent's reasonable interpretation of both. At the hearing the Respondent had indicated that all his accountants had actually done by way of advice was to refer him to the guidance.

In response to Ground 2, the Respondent did not accept HMRC’s submission that the FTT invented a new "honest belief" test that was not found in the legislation. He submitted that this mischaracterises the FTT's reasoning. The FTT did not replace the statutory test with a new one but instead used the Respondent's honest belief to assess whether the Respondent reasonably interpreted the SEISS eligibility criteria in good faith, particularly given the lack of clarity in the guidance at the time. Where official guidance is ambiguous, the Respondent submitted that taxpayers' reliance upon it is a relevant factor.

He argued that the concept of honest belief was applied as contextual background, not as a substitute for the statutory test. The FTT's reference to honest belief helped explain the Respondent's conduct and understanding of the SEISS requirements, given the rapidly changing and confusing guidance during the early stages of the pandemic.

The Respondent also relied upon HMRC’s requirement for claimants to claim SEISS personally and its legal implications. He contended that it was significant that HMRC’s official SEISS guidance expressly required individuals to make their claims personally and not through an accountant or adviser. The guidance stated: “You must make the claim yourself. Do not ask a tax agent or adviser to claim on your behalf as this will trigger a fraud alert, which will delay your payment.”

He submitted that this requirement confirmed that HMRC expected ordinary claimants to rely directly on its public-facing guidance, not on legal interpretation nor professional tax advice. It would therefore be inconsistent for HMRC now to argue that claimants should have interpreted the detailed legal framework differently from what was implied or omitted in the guidance at the time. In directing individuals to make these claims themselves, HMRC positioned its guidance as the sole practical tool for assessing eligibility. Claimants like the Respondent were not just relying on the guidance in good faith — they were effectively required to do so by design of the scheme.

The Respondent finally observed that HMRC’s appeal appears less about correcting a material legal error and more about preserving a rigid interpretative stance that could deter future challenges. He submitted that it is not an error of law for the FTT to consider government guidance, particularly where the statutory language is subject to interpretation and the guidance shapes claimants' conduct during a time of national uncertainty.

He therefore submitted that the appeal should be dismissed, and the FTT's Decision regarding the First Claim should be upheld.

We consider each of HMRC’s grounds of appeal in turn.

In essence, we agree with Ms Inglis’s submissions for the reasons she gave.