Judgment summary
This is an appeal by PM Consulting Nistorescu Ltd against assessments issued by HMRC to recover allegedly overpaid grants under the Coronavirus Job Retention Scheme (CJRS). The Company made 47 claims from 1 March 2020 to 30 September 2021, all relating to its sole employee and director, Mr Gabriel Nistorescu (1).
The notice of appeal was late, but HMRC consented to an extension of time, which the Tribunal granted (2). The key issues were the Company's entitlement to claim for the periods 1 April 2020 to 30 June 2020 and 1 July 2020 to 31 October 2020, and the correct amount of claims for the periods 1 November 2020 to 30 April 2021 and 1 May 2021 to 30 September 2021 (3).
HMRC issued the 2023 Assessments in the sum of £45,735 and, following a review, reduced the figure to £26,553.65, leading to the issue of the 2024 Assessments in the lower sum (7). The Tribunal agreed to reduce the 2024 Assessments to nil and treat the decision as relating to the variation of the 2023 Assessments (9-12).
The Tribunal found that the Company's First Timesheets and First Record, provided to HMRC before any suggestion of unreliability, were the most reliable evidence, and that later revised timesheets were produced in response to HMRC's explanation of the 21-day work-free period requirement rather than because of any genuine inaccuracy (20-26).
The Tribunal rejected the Company's overarching arguments, including that CJRS requirements were abusive or unenforceable, that HMRC's acceptance of claims on the portal precluded recovery, and that the assessments breached Article 6 of the European Convention on Human Rights (31-41). The assessments were found valid and within time under section 34(1) TMA 1970 (42).
For the periods to 31 October 2020, the Tribunal found that Mr Nistorescu had not ceased all work for 21 consecutive calendar days, so the Company was not a qualifying employer, following the reasoning in Glo-Ball Group Limited v HMRC [2023] UKFTT 00435 (TC) (45-57). For the later periods, there was no dispute that the Company was a qualifying employer, and the Tribunal accepted HMRC's calculations of the cap on reimbursement as correct (58-69).
Background
The Company was incorporated on 23 November 2018 and operates as a personal service company providing Mr Nistorescu's consultancy services, predominantly to an overseas market, including project management for engineering programmes such as high speed railways and transport infrastructure (14). Mr Nistorescu is the Company's sole employee and sole director, with earnings for the tax year to 5 April 2020 of £30,000 (15).
HMRC's enquiries began with a compliance check on 8 August 2022, conducted by Officer Pamela Rosie, leading to a pre-assessment letter on 27 March 2023 (6). Officer Kenneth Baird issued the 2023 Assessments on 29 June 2023 in the sum of £45,735 (7). The Company appealed, and following a review, Officer Andrew Byrne's review conclusion letter dated 24 January 2024 upheld the refusal for the earlier periods but reduced the overall figure to £26,553.65 for the later periods. HMRC then issued the 2024 Assessments on 28 March 2024 in the reduced sum (7).
Core dispute
The dispute centred on whether the Company was a qualifying employer entitled to claim under the CJRS for the periods 1 April 2020 to 30 June 2020 and 1 July 2020 to 31 October 2020, which depended on whether Mr Nistorescu had ceased all work for at least 21 consecutive calendar days (3, 43).
For the periods 1 November 2020 to 30 April 2021 and 1 May 2021 to 30 September 2021, it was accepted the Company was a qualifying employer, and the dispute concerned the correct operation of the maximum sum payable (cap) calculations (3, 58, 65).
The Company also raised overarching arguments that HMRC's requirements for evidence were abusive and unenforceable, that HMRC's own lack of documentation undermined the assessments, that acceptance of claims on the CJRS portal precluded recovery, and that the assessments breached Article 6 of the European Convention on Human Rights (29).
Court findings
The Tribunal found that the First Record and First Timesheets, provided by Mr Nistorescu to HMRC before any suggestion of unreliability, were reliable, and preferred them over the later Second and Third Timesheets, which were revised after HMRC explained the 21-day work-free period requirement (20-26).
The Tribunal held that the Company's good faith did not affect its obligation to establish entitlement to the grants (31). It found that HMRC's entitlement to assess arose under paragraphs 8 and 9 of Schedule 16 to the Finance Act 2020, not from any requirement as to form or manner of claim, so the Company's contractual unfairness arguments were inapplicable (32-37).
The Tribunal found that acceptance of claims on the CJRS portal did not preclude HMRC from later assessing amounts to which the Company was not entitled (39). It found no breach of Article 6, as the Company had a full right of appeal to a Tribunal with full appellate jurisdiction (41). The assessments were held valid and within the four-year time limit under section 34(1) TMA 1970 (42).
Agreeing with Glo-Ball Group Limited v HMRC [2023] UKFTT 00435 (TC), the Tribunal held that 'all work' includes even a single piece of work, whether or not income-generating, and that the First Timesheets showed no consecutive 21-day period without work, so the Company was not a qualifying employer for the periods to 31 October 2020 (45-52, 56-57).
For the later periods, the Tribunal accepted HMRC's calculations of worked and furloughed hours and the operation of the 80%, 70% and 60% caps, as reproduced in the Review Conclusion Letter, finding them correct in the absence of specific challenge by the Company (63, 69).
Outcome
The Tribunal reduced the 2024 Assessments to nil and varied the 2023 Assessments to reflect the amount of the 2024 Assessments, being a total of £26,553.65 (70).
Because this involved a variation reducing both assessments, the Tribunal treated the appeal as allowed in part, notwithstanding that the financial outcome was the one envisaged by the Review Conclusion Letter (70).
The Tribunal confirmed that the overclaim calculations annexed to the Review Conclusion Letter were correct (71).
Major issues / areas of contention
- Whether Mr Nistorescu ceased 'all work' for 21 or more consecutive calendar days, as required to be a furloughed employee under the First Direction, for the period 1 April 2020 to 30 June 2020 (43, 49).
- Whether the Company was a 'qualifying employer' for the period 1 July 2020 to 31 October 2020 under the Third Direction, which depended on the outcome of the earlier period (53, 56).
- The reliability of competing versions of timesheets (First, Second and Third Timesheets) and records (First and Second Record) submitted by the Company to HMRC (16-26).
- Whether the correct operation of the maximum sum payable (cap) calculations, at 80%, 70% and 60%, was applied for the periods 1 November 2020 to 30 April 2021 and 1 May 2021 to 30 September 2021 (58-69).
- Whether HMRC's requirement for supporting evidence under paragraph 2.3/2.4 of the CJRS Directions was abusive, unfair or unenforceable by analogy with contract and consumer law authorities (29, 36).
- Whether HMRC's acceptance of claims via the CJRS portal precluded subsequent assessment and recovery (29, 39).
- Whether the assessments breached the Company's right to a fair trial under Article 6 of the European Convention on Human Rights (29, 41).
- Whether the 2023 Assessments and 2024 Assessments were valid and made within the time limit under section 34(1) of the Taxes Management Act 1970 (42).
- How to treat the interplay between the 2023 Assessments and the 2024 Assessments covering the same CJRS claims (8-12).