Coronavirus Job Retention Scheme (CJRS) claims were denied by the First Tier Tribunal. The claims were contrary to the exceptional purposes of the scheme.

In Aemtrie Limited, Aemyrie Holdings Limited, and True Wood Grills Limited v HMRC [2024] TC09116, the First Tier Tribunal (FTT) rejected Coronavirus Job Retention Scheme (CJRS) claims, ruling that they were contrary to the scheme's purpose.

  • The taxpayers (three employing companies) made CJRS claims in respect of the sole director and shareholder (PW) and an employee (CHW). 
  • The CJRS claims were made on the basis that PW and CHW were paid a fixed salary. 
  • HMRC opened Enquiries into the CJRS claims and concluded that PW and CHW were remunerated at a variable rate and the CJRS claims were incorrect. HMRC issued assessments for the errors.
  • The taxpayer Appealed the assessments.

The First Tier Tribunal (FTT) found that: 

  • The employment contracts between the parties stated that PW and CHW were fixed-rate employees. 
  • The terms of the employment contracts meant that PW and CHW were, in fact, variable-rate employees because:
    • A fixed salary would only be paid subject to sufficient funding being available.
    • Monthly decisions were made to determine the amount of payment, if any, and there was no intention to backpay PW and CHW.
    • There was no reasonable expectation to be paid in any month for which the claims were made.
    • As a matter of law, the employment contracts did not provide for entitlement to an annual salary for specified hours. 
  • The CJRS claims should have been made based on PW and CHW being variable-rate employees.
  • The purpose of signing new employment contracts was to access payments under CJRS:
    • The payments ceased when it became evident that no claim would be made for those payments.
    • The FTT questioned whether the employment was needed at all. At the time of the claims, the companies had no turnover and no prospect for turnover with which to pay salaries.
    • Without the new CJRS commitment, there was no improved prospect for the conditions for salary to be paid.
    • Re-employment was to be immediately followed by a new period of furlough.
    • Redundancy payments made to PW and CHW were made for personal reasons. The business circumstances had changed very little between the decision to enter the contracts and to make the redundancies.
    • The purpose of CJRS (Fifth Direction), was to reimburse employers for costs incurred due to Coronavirus restrictions, maintaining the workforce affected by the pandemic.
    • The employing companies did not incur costs of employment which were adversely affected by Coronavirus.

The FTT dismissed the appeal and exercised its power to increase HMRC’s assessments, deeming the claims of two employing companies to be ineligible for CJRS, because the claims were contrary to the exceptional purposes of the scheme.

Useful guides on this topic

COVID-19 zone: all about tax and financial support during the crisis.

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: Coronavirus Job Retention Scheme (CJRS) to 31 October 2020
Coronavirus Job Retention Scheme (CJRS): a cash grant payable to employers up to 31 March 2021.

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External Links

Aemtrie Limited & Ors v HMRC [2024] TC09116