In Thomas Merlin Ash v HMRC [2023] TC08749, the First Tier Tribunal (FTT) denied claims under the Self Employment Income Support Scheme (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.

The Coronavirus Self Employment Income Support Scheme (SEISS) eligibility conditions for the first two grants paid in 2020 required:

  • A trade to have been carried on in the tax years 2018-19 and 2019-20.
  • An intention to continue the trade in 2020-21.
  • The business to have been adversely affected by Coronavirus.

Mr Ash was a self-employed TV and Film Editor until August 2018 when he incorporated and commenced employment with his new company as a director.

  • He filed his 2018-19 tax return on time by 31 January 2020.
  • In May 2020 he received an email from HMRC which said: “We contacted you recently because we think you are eligible for a grant under the Self-Employment Income Support Scheme.”
  • Mr Ash made claims for the SEISS first and second grants in May and August 2020 receiving grants of £7,500 and £6,750. He did not advise his accountant of the claims as it was not possible for advisers to make claims for their clients under this particular scheme.
  • In May 2020 the accountant made claims for Mr and Mrs Ash as company directors under the Coronavirus Job Retention scheme (CJRS).
  • HMRC’s audit trail showed that Mr Ash had viewed the online disclaimer and declaration pages when he made the claims online. These set out that by going ahead and making the claims he was confirming that he had read the HMRC published guidance, was making his claims in accordance with this, and that his business had been adversely affected by Coronavirus. The guidance itself stated, “You should not claim the grant if you are a limited company” but was not directly provided within the claims process, only a link was supplied.
  • In October 2020 HMRC contacted Mr Ash to tell him that as his tax return indicated he had stopped trading he was not eligible for the grants and must repay them. HMRC raised an assessment for both claim amounts. This was upheld on independent review.
  • Mr Ash Appealed the decision. He accepted he was not eligible for the grants but claimed, notwithstanding that ineligibility, that he had a Legitimate expectation to the money after being invited to apply for it.

The FTT dismissed his appeal.

  • S50 TMA 1970, which governs appeals against assessments and is therefore applied here, does not allow for the consideration of an appeal by reference to public law grounds such as legitimate expectation. The FTT did not, therefore, have jurisdiction to consider this.
  • Although his tax return showed that he was trading at the start of the 2018-19 tax year, Mr Ash was not trading at the relevant times for SEISS and as such did not meet the eligibility requirements of the scheme. Whilst HMRC knew from his tax return that his self-employment had ceased it was his responsibility to claim properly, as set out in the disclaimer and declaration that he had viewed, accepted and submitted.

The FTT judge did however point out that this was a claim and appeal that could have been avoided had clearer wording been employed by HMRC at the time the claims were made, and had the published guidance been provided rather than simply referred to as, in those circumstances, it was likely that Mr Ash would never have made the claims.

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. 

Grounds for Appeal: Legitimate Expectation
What is a legitimate expectation and when is it grounds for appealing a tax penalty or HMRC decision?

External link

Thomas Merlin Ash v HMRC [2023] TC08749 

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