There have been two recent decisions of interest concerning the Coronavirus Job Retention Scheme (CJRS).
In City Blinds Scotland Ltd v HMRC [2025] UKFTT 1100 (TC) (11 September), the FTT upheld an HMRC assessment to recover overpaid support payments under the CJRS. The company, a manufacturer and supplier of blinds, made five claims to support payments for periods from March 2020 to March 2021. There was no dispute that the employees were fixed rate employees and that the pay figures used were correct. There were two main issues in dispute.
The first issue concerned the calculation of 80% of the employees’ reference salary. HMRC’s assessment converted the monthly pay into a daily rate using a denominator of seven days in a week. The company argued that a denominator of five should have been used as the employees worked five days a week. The FTT upheld HMRC’s approach. The Direction which governed the calculation of reference salaries referred only to annual salaries. In the absence of any further definitions, the FTT looked at the ordinary meaning from the Oxford Concise Dictionary of ‘annual’ as ‘occurring every year’. As it then defined a year as a period of 365 or 366 days, the use of a five-day week, meaning a 260-day year, was inappropriate.
The second issue related to the offset of underpayments for some of the periods for which claims were made should be set off against the overpayments to be recovered by the assessment. The FTT held that no offset could be made. The company was unable to identify any appropriate legislation which would have allowed the set-off.
Our second CJRS case is Complete Solutions Europe Ltd v HMRC [2025] UKFTT 1116 (TC) (19 September). The dispute here also concerned the calculation of the reference salary, in this case of five spa engineers on zero-hours contracts who were paid a fixed day rate for work completed but were not paid during periods when no work was available. The employees had begun work on a new contract on 1 March 2020 and had continued until they were furloughed on 23 March 2020 but were not paid for this work until the March 2020 payroll was run after that date.
HMRC calculated the reference pay by averaging amounts paid to the employees in the period from 6 April 2019 to the day before furlough began, so excluding the pay for the work on the new contract in March 2020 which was not paid in that period. The FTT, however, noted that the CJRS Direction did not refer to amounts paid ‘in’ a period, but rather to amounts paid ‘for’ a period. This was intended to capture the remuneration paid to an employee in respect of the period in question, whenever they were in fact paid. The FTT therefore ordered that the parties should agree reductions to the assessments to reflect the correct calculation of the average pay.
Why it matters: Anybody dealing with CJRS enquiries will find much of interest in these two decisions. Both raise important points which do not appear to have been litigated before.
There have been two recent decisions of interest concerning the Coronavirus Job Retention Scheme (CJRS).
In City Blinds Scotland Ltd v HMRC [2025] UKFTT 1100 (TC) (11 September), the FTT upheld an HMRC assessment to recover overpaid support payments under the CJRS. The company, a manufacturer and supplier of blinds, made five claims to support payments for periods from March 2020 to March 2021. There was no dispute that the employees were fixed rate employees and that the pay figures used were correct. There were two main issues in dispute.
The first issue concerned the calculation of 80% of the employees’ reference salary. HMRC’s assessment converted the monthly pay into a daily rate using a denominator of seven days in a week. The company argued that a denominator of five should have been used as the employees worked five days a week. The FTT upheld HMRC’s approach. The Direction which governed the calculation of reference salaries referred only to annual salaries. In the absence of any further definitions, the FTT looked at the ordinary meaning from the Oxford Concise Dictionary of ‘annual’ as ‘occurring every year’. As it then defined a year as a period of 365 or 366 days, the use of a five-day week, meaning a 260-day year, was inappropriate.
The second issue related to the offset of underpayments for some of the periods for which claims were made should be set off against the overpayments to be recovered by the assessment. The FTT held that no offset could be made. The company was unable to identify any appropriate legislation which would have allowed the set-off.
Our second CJRS case is Complete Solutions Europe Ltd v HMRC [2025] UKFTT 1116 (TC) (19 September). The dispute here also concerned the calculation of the reference salary, in this case of five spa engineers on zero-hours contracts who were paid a fixed day rate for work completed but were not paid during periods when no work was available. The employees had begun work on a new contract on 1 March 2020 and had continued until they were furloughed on 23 March 2020 but were not paid for this work until the March 2020 payroll was run after that date.
HMRC calculated the reference pay by averaging amounts paid to the employees in the period from 6 April 2019 to the day before furlough began, so excluding the pay for the work on the new contract in March 2020 which was not paid in that period. The FTT, however, noted that the CJRS Direction did not refer to amounts paid ‘in’ a period, but rather to amounts paid ‘for’ a period. This was intended to capture the remuneration paid to an employee in respect of the period in question, whenever they were in fact paid. The FTT therefore ordered that the parties should agree reductions to the assessments to reflect the correct calculation of the average pay.
Why it matters: Anybody dealing with CJRS enquiries will find much of interest in these two decisions. Both raise important points which do not appear to have been litigated before.
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