Attempts to make Coronavirus Job Retention Scheme (CJRS) claims using calculations for fixed-rate employees were rejected by the First Tier Tribunal (FTT). The employees did not meet the definition of a fixed-rate employee.
In Jama Academy Limited v HMRC [2024] TC09131, the FTT ruled that employees did not meet the definition of a fixed-rate employee and the Coronavirus Job Retention Scheme (CJRS) claims had been incorrectly calculated.
- The taxpayer had made claims under CJRS, on the basis that its employees were Fixed-rate employees.
- HMRC concluded that the taxpayer had overclaimed. They issued Assessments, stating that the CJRS payment should have been calculated on the basis that the employees were not fixed-rate employees.
- The taxpayer partially Appealed the assessments.
The FTT found that:
- The employees were not fixed-rate employees.
- The employees were variable rate employees, because the employment contracts:
- Did not provide entitlement to a fixed salary.
- Whilst the contracts did specify fixed hours, the employer could vary those hours.
- The taxpayer should not have used a fixed monthly salary in its calculations, as this did not reflect the employees' average daily or monthly pay.
- The reference salary for each employee and each period of claim should have been calculated using the higher of:
- The actual amount paid to the employee in the corresponding calendar period in the previous year.
- The average monthly (or daily or other appropriate pro-rata) amount paid to the employee for the period comprising the tax year 2019/20 before the period of furlough began.
- The FTT accepted HMRC’s revised calculations and the appeal was dismissed.
Useful guides on this topic
COVID-19
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.
Closure notices
When does HMRC issue a Closure Notice? Can a taxpayer demand one? Are there appeal rights?
Time limits for tax assessments, claims and refunds
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?
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