Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) on KNR Flooring Ltd's renewed application for permission to appeal against a First-tier Tribunal decision released on 9 May 2025 (TC/2023/08106).
The FTT had refused permission to appeal on 10 July 2025, and KNR renewed its application, which Judge Zaman first refused on the papers before reconsidering it at an oral hearing on 16 February 2026.
The Upper Tribunal considered five grounds of appeal, all relating to the FTT's findings on the quantum of Coronavirus Job Retention Scheme (CJRS) payments claimed by KNR for its two directors. The Tribunal concluded that none of the grounds disclosed an arguable error of law and refused permission to appeal on all grounds.
Background
KNR Flooring Ltd made CJRS claims on the basis that the reference pay for each of its two directors was £2,952 per month, said to be the gross pay for month 11 (the month ending 5 March 2020), as reported to HMRC by 19 March 2020 (FTT[24]).
HMRC concluded that the correct reference pay figure was £512 per month for each director and issued assessments on that basis (FTT[24]).
The FTT released its decision on 9 May 2025 (TC/2023/08106), concluding that KNR had not shown, on the balance of probabilities, that it had been overcharged by the assessments, and that the assessments were based on information KNR itself submitted in an RTI return made to HMRC on 19 March 2020.
KNR sought permission to appeal on five grounds, which the FTT refused in a decision notice released on 10 July 2025 (the FTT PTA Decision). KNR renewed its application to the Upper Tribunal on 10 August 2025, within the applicable time limit. Judge Zaman refused permission on the papers (the UT Papers Decision), and KNR applied for that refusal to be reconsidered at an oral hearing.
Core dispute
The substantive issue before the FTT was the quantum of CJRS payments KNR was entitled to claim for its two directors, turning on whether the reference pay was £2,952 per month (KNR's position) or £512 per month (HMRC's position) (FTT[24]).
Before the Upper Tribunal, the dispute was whether KNR could show an arguable error of law in the FTT's decision on five grounds: (1) misapplication of the law on burden and standard of proof; (2) misapplication of the CJRS Directions in relation to contradictory RTI data; (3) failure to properly consider material evidence, including the Business Objects Report and an RTI discrepancy; (4) procedural irregularity in failing to resolve an evidential conflict and engage with the significance of NIC data; and (5) procedural irregularity in failing to properly consider accounting and bookkeeping evidence.
KNR argued that RTI returns are not necessarily determinative where contemporaneous documents, such as payslips, bookkeeping records and NIC data, show different figures, and that HMRC's Business Objects Report and RTI data contained internal inconsistencies that undermined HMRC's assessments.
Court findings
The Upper Tribunal noted that an appeal under s11(1) Tribunals Courts and Enforcement Act 2007 may only be made on a point of law, and that an applicant must show it is arguable, in the sense of a realistic rather than fanciful prospect of success, that the FTT erred in law in a way material to its decision.
The Tribunal found that, although KNR's grounds referred to burden of proof and misapplication of the law, they were largely Edwards v Bairstow style challenges to the FTT's findings of fact, and the bar for establishing an error of law on such challenges is deliberately set high.
Reading the Decision as a whole, the Tribunal found that the FTT had considered the evidence and submissions from both parties, including the Business Objects Report, evidence from Officer Barrett, evidence from the directors as to salary increases, the bookkeeping software relied upon, the absence of bank statements, and submissions on the NIC position (FTT[43], [44], [47], [55], [58], [60], [62], [64], [67], [68], [78], [80]-[85]).
The Tribunal considered documents in the court bundle relied on by Mr Mitchell, including the Business Objects Report, HMRC's NIC submission records for months 11 and 12, the month 12 PAYE statement, the end of year summary showing total pay of £8,976 for each director, the RTI full payment submission for February 2020, and payslips showing pay of £2,952. It noted a caveat on the RTI full payment submission that figures may differ from those originally sent to HMRC if payroll data has since changed.
The Tribunal, applying Volpi v Volpi [2022] EWCA Civ 464, held that an appellate tribunal should not interfere with findings on primary facts unless the judge was plainly wrong, and that weight given to evidence is a matter for the trial judge. It was not persuaded that the FTT's decision was plainly wrong or one that no reasonable judge could have reached, and found that the FTT had not treated HMRC's RTI data as conclusive but had weighed the competing evidence.
Outcome
The Upper Tribunal was not persuaded that it was arguable that the FTT made an error of law on any of the five grounds of appeal.
Permission to appeal was refused on all grounds (paragraph 25).
Major issues / areas of contention
- Whether the FTT misapplied the law on burden and standard of proof by treating HMRC's RTI data as conclusive
- Whether the FTT misapplied the CJRS Directions by failing to resolve a material internal conflict within the RTI data
- Whether the FTT failed to properly evaluate the Business Objects Report and an RTI discrepancy
- Whether the FTT failed to resolve an evidential conflict and engage with the significance of NIC RTI data, amounting to procedural irregularity
- Whether the FTT failed to properly consider accounting and bookkeeping evidence and gave insufficient reasons for rejecting contemporaneous records