In Ali Sadiq Jaafar v HMRC [2024] TC9279, an appeal to the First Tier Tribunal (FTT) in respect of Coronavirus Support Payments backfired. The evidence revealed that the taxpayer was not trading at the time and that a claim made by his dormant company for a Bounce Back Loan was likely to have been wrongly made too.
- The ex-mini-cab driver had Ceased trading on 30 September 2019, a fact confirmed by his agent.
- He formed a company and filed dormant company accounts for the year to 30 September 2019 and then micro-company accounts for accounting periods thereafter.
- He claimed payments under the Self-Employed Income Support Scheme (SEISS) after claiming via his agent that he continued to carry on a self-employment trade in the 2020/21 tax year.
- HMRC decided that he was no longer self-employed and raised an assessment, for £7,136, was made to recover three claims in respect of Coronavirus Support Payments under the Self-Employed Income Support Scheme (SEISS
The taxpayer appealed to the FTT.
The FTT considered the terms of a Treasury Direction published on 30 April 2020 which provided the statutory scheme for HMRC to administer the SEISS.
It applied to the first claim; the second and third claims that a qualifying person must:
- (a) Carry on a trade the business of which has been adversely affected by the circumstances arising as a result of Coronavirus or Coronavirus disease.
- (b) Have delivered a tax return for a relevant tax year on or before 23 April 2020.
- (c) Have carried on a trade in the tax years 2018-19 and 2019-20.
- (d) Intend to continue to carry on a trade in the tax year 2020-21.
- (f) Be an individual.
- (g) Meet the profits condition.
As the evidence unfolded before the tribunal, it was noted that:
- Personal bank statements reveal some receipts from cabbing.
- Car insurance confirmed no business insurance for taxi services.
- There was scant evidence of self-employment and the qualifying conditions of the Treasury Direction could not be met.
- Further, the director’s company had claimed a Bounce Back Loan.
The FTT 'took judicial note' that the maximum loan available to a business through the bounce-back scheme was the lower of £50,000 or 25% of the self-certified turnover of the business. It also required that the business confirm that its trade had been adversely affected by the pandemic. The loans were also available to self-employed individuals, not only companies.
Finding it difficult to reconcile Mr Jaafar’s evidence with the claim made by the company for this loan, the FTT considered that the loan is more likely to be indicative of Mr Jaafar having traded only through his company after 30 September 2019.
The taxpayer’s appeal was dismissed
Useful guides on this topic
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.
COVID-19: Loan funding
COVID-19: different types of loan funding. All loan funding is repayable.
Ceasing trading: What are your options?
What are your options if you are going to cease trading? What processes must be followed if you want to close down a company? What are the tax, company and insolvency law requirements?
External links
Ali Sadiq Jaafar v HMRC [2024] TC9279
