Jama Academy Limited v The Commissioners for HMRC
[2024] UKFTT 302 (TC)
Farshad Khalili-Motlagh t/a Borge Restaurant v The Commissioners for HMRC
19 June 2024
[2024] UKFTT 541 (TC)
First-tier Tribunal
A restaurant owner received incorrect CJRS payments because HMRC used inaccurate figures from government reporting. The Tribunal said HMRC should have used the actual, correct wages, even if they weren't initially reported. The restaurant owner won some of their appeal.
Key Facts
- •Appeal against HMRC assessments for overpayment of Coronavirus Job Retention Scheme (CJRS) funds.
- •Appellant, Farshad Khalili-Motlagh (FKM), withdrew appeal except for £2,810.08.
- •Dispute concerned whether reference salary for three employees (LE, WR, LB) was correctly calculated.
- •HMRC used Real Time Information (RTI) return figures; FKM argued these were inaccurate and lower than actual payments.
- •FKM provided witness statements from employees supporting his claim of higher actual pay.
- •HMRC argued RTI figures should be definitive.
Legal Principles
HMRC's powers regarding CJRS are derived from Section 76 of the Coronavirus Act 2020 and the Coronavirus Direction.
Coronavirus Act 2020, Section 76; Coronavirus Direction (15 April 2020)
CJRS claims require payments to employees shown in RTI returns before a relevant CJRS day (paragraph 5 of the Coronavirus Direction).
Paragraph 5 of the Schedule to the Coronavirus Direction
Reference salary is determined by paragraph 7.2 of the Coronavirus Direction as the greater of average monthly pay in 2019-20 or the actual amount paid in the corresponding period of the previous year. It does not explicitly state RTI figures are definitive.
Paragraph 7.2 of the Schedule to the Coronavirus Direction
Paragraph 8 of Schedule 16 to Finance Act 2020 makes recipients of incorrect CJRS support payments liable for income tax.
Paragraph 8 of Schedule 16 to Finance Act 2020
Paragraph 9 of Schedule 16 to Finance Act 2020 grants HMRC the power to make assessments for income tax on incorrect CJRS payments.
Paragraph 9 of Schedule 16 to Finance Act 2020
Outcomes
Appeal allowed in part.
The Tribunal found that the witness statements, although uncorroborated and made after the fact, were credible enough, in light of the small sums involved, to support FKM's claim that the actual wages paid were higher than those reported on the RTI returns. The Tribunal also found that the legislation didn’t necessitate reliance solely on RTI figures for calculating the reference salary.
£2,810.08 of the assessment was overturned.
This amount reflected the difference between the RTI figures and the actual pay figures as found credible by the Tribunal.
The remainder of the appeal was dismissed.
FKM had withdrawn his appeal in relation to the majority of the assessment amounts.