Kingdom Travel Services Limited v The Commissioners for HMRC

1 August 2024

[2024] UKFTT 716 (TC)

First-tier Tribunal

A travel company got extra money from the government's COVID-19 job support scheme (CJRS). The government (HMRC) realised this was a mistake because the company used increased salaries instead of their normal salaries to calculate the payment. The court decided the company had to repay the extra money, as the rules of the scheme clearly state that they should have used their normal salary.

Key Facts

•Kingdom Travel Services Ltd. (Appellant) appealed HMRC assessments under paragraph 9, Schedule 16, Finance Act 2020 (FA20) relating to Coronavirus Job Retention Scheme (CJRS) overpayments.
•The Appellant claimed CJRS payments for three employees based on a monthly salary of £2000, significantly higher than their pre-furlough salaries.
•HMRC assessed the Appellant for £35,469.36 and £18,110 for the accounting periods ended 31 March 2021 and 31 March 2022 respectively.
•The Appellant's employees' pre-furlough salaries were £900, £700 and £811.04 respectively.
•The Appellant argued that salary increases were implemented on 22 February 2020.
•HMRC argued the Appellant's claims did not comply with the Treasury Directives governing CJRS.

Legal Principles

CJRS payments are reimbursements for furlough-related employment costs, not for salary increases.

Coronavirus Act 2020 (CA20), Section 76, and Treasury Directives (paragraphs 2.1, 2.2 of the First Direction)

For fixed-rate employees, the reference salary for CJRS calculations is the amount payable in the latest salary period before 19 March 2020.

Treasury Directives (paragraphs 7.6, 7.7 of the First Direction, and paragraphs 11.1-4 of the Fifth Direction)

Schedule 16 FA20 provides the statutory basis for taxing incorrectly received coronavirus support payments.

Finance Act 2020 (FA20), Schedule 16, paragraphs 8 and 9

Assessments must be made within 4 years of the tax becoming due (Taxes Management Act 1970 (TMA)).

Taxes Management Act 1970 (TMA), Section 34, and paragraph 8 Schedule 16 FA20

Outcomes

Appeal dismissed.

The Appellant's CJRS claims exceeded their entitlement under the Treasury Directives, as they were based on increased salaries not reflecting the pre-furlough reference salary. The assessments were valid and timely.

Kingdom Travel Services Limited v The Commissioners for HMRC

Key Facts

Legal Principles

Outcomes

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