Josoemag Services Limited v The Commissioners for HMRC
[2024] UKFTT 744 (TC)
Lucky Eyes Ltd v The Commissioner Of HMRC
26 September 2024
[2024] UKFTT 868 (TC)
First-tier Tribunal
Lucky Eyes got extra money from the government's COVID-19 job support scheme. The government realised this and demanded it back. Lucky Eyes argued the extra money was okay, but the court sided with the government and said Lucky Eyes must repay the overpayment, rejecting Lucky Eyes' arguments that the overall amount received was still reasonable.
Key Facts
- •Lucky Eyes Limited appealed two income tax assessments issued by HMRC under paragraph 9, Schedule 16, Finance Act 2020, relating to overclaimed Coronavirus Job Retention Scheme (CJRS) payments.
- •The assessments, initially £9,947.20 and £18,184.90, were reduced to £8,284.27 and £18,010.40 respectively after a review.
- •Lucky Eyes claimed CJRS payments for five employees over 17 months (May 2020 – September 2021).
- •HMRC's initial calculations were incorrect, assuming some employees were 'fixed rate' when they were 'variable rate'.
- •Lucky Eyes argued that calculations should use March 2020 salaries and that the spirit of the CJRS was to support businesses.
- •A key dispute was whether underclaimed amounts in July and August 2020 could offset overclaims in other months. HMRC argued this was not permissible between claim periods.
Legal Principles
CJRS eligibility and calculation of reference salary for 'fixed rate' and 'variable rate' employees.
Coronavirus Job Retention Scheme (CJRS), as set out in the Schedule to the Coronavirus Act 2020, Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction (15 April 2020)
Income tax charge for overclaimed coronavirus support payments (paragraph 8, Schedule 16, Finance Act 2020).
Finance Act 2020
HMRC's power to assess income tax under paragraph 9, Schedule 16, Finance Act 2020.
Finance Act 2020
Burden of proof rests on the appellant (Lucky Eyes) to demonstrate that employees were 'fixed rate' under CJRS 7.6(b).
Case law (implied)
Outcomes
Appeal dismissed.
The tribunal found that Lucky Eyes failed to prove its employees were 'fixed rate' employees; therefore, HMRC's revised calculations using the 'variable rate' method were correct. No set-off of underclaimed amounts against overclaimed amounts was permitted between different claim periods under the CJRS.
Assessments reduced to HMRC's revised amounts.
HMRC's revised calculations, although initially erroneous, were accepted after correcting for the misclassification of employees and calculation errors.
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