COVID-19: Tax Appeals

Government financial support to businesses affected by COVID-19 was made on a 'pay now, check later' basis after the start of 'lockdown' in March 2020. Appeals against decisions by HMRC which claw back support payments are now reaching the tax tribunals. Here we track tax appeals involving the employee Coronavirus Job Retention Scheme (CJRS), the Self Employment Income Support Scheme (SEISS) and also VAT.

Appeals: Coronavirus Job Retention Scheme (CJRS)

In all these appeals HMRC has reviewed the employer's PAYE RTI submissions to the claims made and decided that it did not meet the qualifying conditions to claim a payment in respect of wages paid under the CJRS.

In Sentinel Fire and Security Systems Limited v HMRC [2023] TC08849, the First Tier Tribunal (FTT) confirmed that as the legislative requirements had not been met for the Coronavirus Job Retention Scheme (CJRS), HMRC were able to clawback the claim regardless of any apparent unfairness.

In Raystra Healthcare Limited v HMRC [2023] TC08838, the First Tier Tribunal (FTT) found that a failure to file Real-Time Information (RTI) returns on or before 19 March 2020 due to a software issue, invalidated a claim under the CJRS.

In Top-Notch Accountants Limited v HMRC [2023] TC08833, the First Tier Tribunal (FTT) found that the CJRS conditions were not met. Documents produced in support of the claim had been deliberately manipulated. The appeal was dismissed. The FTT varied the assessment to £14,673, at HMRC’s request.

In Glo-Ball Group Limited v HMRC [2023] TC08823, the First Tier Tribunal (FTT) found that a director, who had made posts on their company’s Facebook account while furloughed, was working. This made the director ineligible for CJRS support. 

In Zoe Shisa Events Limited v HMRC [2023] TC8805, the First Tier Tribunal (FTT) found that backdated payslips could be used for an employee CJRS claim as the pay was evidenced by bank statements for that period. A director's salary increase could not be evidenced and the CJRS claim was restricted for that part of the claim.

In Oral Healthcare Limited v HMRC [2023] TC8781, a company had to repay £35,739 after it failed to meet the conditions of the CJRS. Employees were employed in March 2020 but were not added to PAYE RTI submissions until after the 19 March cut-off deadline.

In Carlick Contract Furniture Limited v HMRC [2022] TC08543, the First Tier Tribunal (FTT) ruled that CJRS claims for two employees were not qualifying costs, whilst acknowledging that denying the claims seemed to be contrary to the spirit of the scheme.

In Luca Delivery Limited v HMRC [2023] TC8752, the First Tier Tribunal (FTT) heard an appeal against a reclaim of a cash grant paid under the CJRS. It found that failure to meet the scheme conditions was due to a mistake by the taxpayer’s accountants and that was no defence. It did not allow the claim to be validated.

Appeals for Self Employment Income Support Scheme (SEISS)

This scheme was rather different in nature to the CJRS as HMRC had a provided an eligibility tool, meaning it should have been quite easy to check whether you were eligible or not. There have been various challenges to this scheme because it unfairly discriminated against people who were newly self-employed.

In David Hamill v HMRC [2023] TC08827, the First Tier Tribunal (FTT) found that an individual who had ceased to trade in the 2018-19 tax year was not eligible for support under the SEISS. HMRC's assessments were valid.

In Thomas Merlin Ash v HMRC [2023] TC08749, the First Tier Tribunal (FTT) denied claims under the SEISS. Mr Ash, a sole trader who had incorporated his business, had no legitimate expectation of receiving the support just because HMRC had written to him suggesting that he might be eligible.

In Joshua Peter Taylor v HMRC [2022] TC8576, the First Tier Tribunal (FTT) confirmed that a taxpayer who incorporated his business just before the COVID-19 lockdown was not entitled to support payments under the SEISS.  

In The Queen (on the application of) The Motherhood Plan & Kerry Chamberlain v HM Treasury & HMRC [2021] EWCA Civ 1703, the Court of Appeal (CoA) upheld the High Court's dismissal of a judicial review of the lawfulness of the SEISS on the basis that whilst discriminatory it was justified.

VAT

In 3D Crowd CIC v HMRC [2023] TC08837, the First Tier Tribunal (FTT) partially upheld the appeal of a business established during the pandemic to provide free PPE to the NHS. The claim for input VAT was denied by HMRC on the basis that the free supplies were not taxable supplies.

Land and Buildings Transaction Tax (LBTT)

In Iain Robertson v Revenue Scotland [2022] FTSCT 6, a taxpayer fell foul of the LBTT rules after COVID lockdown prevented him from occupying a new property as his main residence. The legislation provided no leniency for exceptional circumstances and he was unable to claim relief from the Additional Dwelling Supplement (ADS).

In Prime Aesthetics Limited v The Welsh Revenue Authority [2020] TC07948, the First Tier Tribunal (FTT) dismissed an appeal against a late payment of LTT. Late payment was not attributable to COVID-19 as claimed.

Useful guides on this topic

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How should you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse? 

Grounds for Appeal: Reasonable excuse
What is considered to be a 'reasonable excuse' when a taxpayer makes an appeal against a tax compliance failure?

COVID-19: Coronavirus Job Retention Scheme (CJRS) to 30 September 2021
What is CJRS? When does the CJRS apply? How to claim CJRS. How to calculate CJRS claim amounts.

COVID-19: Self-Employment Income Support Scheme (SEISS) (now ended)
Self-Employment Income Support Scheme (SEISS): support for the self-employed during the Coronavirus crisis. The fifth SEISS grant covering May to September 2021 was open for claims until 30 September 2021.