In Fieldmuir Ltd t/a Centurion Freight Services v HMRC [2021] TC8309, the First Tier Tribunal (FTT) partially allowed an appeal relating to the refusal of HMRC to repay PAYE and NICs on allowances paid to lorry drivers. The tribunal could hear the case for a repayment of NICs but not for Income Tax as there was no HMRC decision to appeal.

Fieldmuir Ltd provided road haulage and transport services.

  • Between 2010-11 and 2016-17, it paid Overnight allowances to its drivers with sleeper cabs plus a fixed amount per night for Incidentals, believing that the amounts paid were within the HMRC benchmark rates and should be tax-free.
  • The company bookkeeper incorrectly set up the allowances on the accounting software such that they were grossed up and the company paid PAYE and National Insurance Contributions (NICs) accordingly. The drivers’ net pay figures were, the company believed, correct.
  • In April 2018 Fieldmuir wrote to HMRC requesting repayment of what they considered to be excess PAYE and NICs of £220,662.
  • In April 2019 HMRC responded saying that:
    • They noted that the allowances were paid for five days per week, 52 weeks per year including when the drivers were on holiday and where they only worked part-time.
    • As a result, they considered the allowances to be round sum allowances which should be taxed as earnings under s.62 ITEPA 2003 (and correspondingly charged to NIC).
    • An Overpayment relief claim could not be made by an employer for employee PAYE and Class 1 NICs and the only possible claim was for the employer's NICs, which they would refute.
  • HMRC then wrote to the company, on 15 September 2020, stating their intention to issue decision letters under Regulation 80 (PAYE) and Section 9 (NIC) after 30 days. No repayments had been made at that point.
  • On 7 October 2020 Fieldmuir Appealed to the tribunal. No decision notices had been issued by HMRC by that date.
  • HMRC applied for the appeal to be struck out on the grounds that no appealable decision had yet been issued and the appeal had no reasonable chance of success.

The FTT partially allowed the appeal:

  • They struck out the part of the appeal against HMRC’s refusal to repay overpaid Income Tax on the grounds that they had no jurisdiction but declined to strike out the part consisting of an appeal against HMRC’s refusal to repay overpaid NICs for jurisdictional reasons.
    • The difference was that no formal claim had been made (or waived by HMRC under their care and management powers) for the overpaid Income Tax. There was a claim for the NICs upon which HMRC had issued a decision when they responded that no NIC’s had been paid in error, which Fieldmuir could and did, appeal.
  • The FTT then refused to strike out the NICs part of the appeal on the grounds of it having no reasonable chance of success:
    • HMRC’s arguments had not demonstrated that either the law or the facts at issue in the appeal were sufficiently clearly identified, and in HMRC’s favour, to justify striking out.
    • Many of HMRC’s arguments were about evidential inadequacy. It was reasonable to expect the possibility of further evidence being put forward by the appellant, including witness evidence, which might alter the outcome of the case.


The appeal in respect of the NICs repayment claim will be heard by the FTT in due course. The case is a reminder of the need to ensure payroll systems are properly set up from day one but also that the PAYE rules for Income Tax and NICs are different, meaning that different outcomes can result in respect of a single type of payment by an employer.

Useful guides on this topic

Overpayment Relief
What is Overpayment relief? When can you claim Overpayment relief? What are the conditions for a claim for Overpayment relief? What are the time limits for a claim for Overpayment relief?

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?

Recovery of PAYE: Regulation 80 and 72 assessments for PAYE
When can HMRC assess an employer or an employee for unpaid Pay-As-You-Earn (PAYE) and National Insurance Contributions (NICs)? What is a regulation 80 determination? What is a regulation 72 determination? Who is assessed and what are the conditions?

Lorry drivers: What expenses can I claim?
This guide outlines what expenses self-employed Lorry Drivers can claim for tax purposes. 

Scale rates, bespoke rates and fixed-rate expenses
What expense allowances can be paid to employees? What are HMRC's scale rate or bespoke scale rates?

External link

Fieldmuir Ltd t/a Centurion Freight Services v HMRC [2021] TC8309


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