Judgment summary
Timco Ltd appealed against two income tax assessments issued by HMRC on 13 November 2023 to recover amounts paid under the Coronavirus Job Retention Scheme (CJRS). HMRC subsequently increased the assessed amounts on review, resulting in totals of £17,978.88 for 2020-21 and £6,203.48 for 2021-22 (1).
The appellant did not attend the hearing. Its director, Tim Colman, emailed on 4 May 2026 stating he would not attend, citing health issues and that the company had ceased trading, but did not request an adjournment (7-8). The Tribunal decided it was in the interests of justice to proceed in his absence (11-12).
The Tribunal accepted the evidence of HMRC officer Malcolm Mayer, who had calculated the assessments, describing him as a reliable and straightforward witness (6). The Tribunal found that Timco's two employees, Tim and Christopher Colman, were not 'fixed rate employees' under the relevant Direction, so their reference salary had to be calculated as the greater of the average daily rate or the 'lookback' method under Paragraph 7.2 (65-67).
The Tribunal found HMRC's methodology, including two amendments made on review, to be correct, and both amendments favoured Timco (68-72). The Tribunal rejected Timco's method of calculating claims by reference to invoices, finding no basis for it in the relevant legislation (73). The appeal was dismissed and the assessments, as varied, were confirmed (77).
Background
Timco Ltd had two employees, Tim Colman and Christopher Colman, who were also directors and shareholders of the company (13). Between 20 March 2020 and 30 September 2021, Timco made CJRS claims totalling £37,107.70, which HMRC paid in full (14).
On 15 December 2022, HMRC opened a check into the claims and requested information, which was not received, leading to an information notice under schedule 36 of the Finance Act 2008 (15). Following correspondence and an extension for health reasons, HMRC on 12 October 2023 informed Timco it intended to assess £23,800.36 (16-20).
HMRC issued notices of assessment on 13 November 2023 for £17,684.10 (2020-21) and £6,116.26 (2021-22) (21). A closure letter dated 14 December 2023 confirmed the assessments with no penalty charged (22). Following a late appeal accepted by HMRC and further correspondence, HMRC's review conclusion letter of 28 March 2025 increased the assessments to £17,978.88 and £6,203.48 respectively, a total of £24,182.36 (23-27). Timco appealed to the Tribunal on 26 April 2025 (28).
Core dispute
HMRC did not dispute that Timco's employees were furloughed and that CJRS payments were due; the dispute concerned the correct method for calculating the amount of the support payments to which Timco was entitled (58, 60).
Timco's grounds of appeal stated that it had calculated and paid the amounts correctly, that HMRC's figures were wrong despite having Timco's bank statements, and alleged that HMRC ignored its submissions (59).
Mr Colman's email of 9 October 2024 indicated that Timco had calculated its claims as 80% of amounts invoiced in the corresponding period one year earlier (61, 73). HMRC's position, based on Officer Mayer's calculations using RTI data and the 'average daily rate' or 'lookback' method under Paragraph 7.2 of the Direction, was that the amounts claimed by Timco were too high (58, 67).
Court findings
The Tribunal found that the assessments were correctly served and made within the applicable time limits under section 34(1) TMA 1970 (62-63).
The Tribunal found that Officer Mayer was correct to treat Tim and Christopher Colman as not being 'fixed rate employees', because the RTI data showed the amounts paid to them varied between pay periods, and the amount payable in the last pay period ending on or before 19 March 2020 was nil (65).
The reference salary therefore had to be calculated under Paragraph 7.2 of the Direction, using the greater of the average monthly/daily amount paid in 2019-20 or the amount paid in the corresponding period the previous year (the lookback method) (66-67). The Tribunal found that Officer Mayer's approach was in accordance with this methodology (67).
The Tribunal found the two amendments made by HMRC's reviewing officer to be correct: excluding payments made on 25 March 2020 from the average daily rate calculation, and calculating two claim periods (starting 2 May 2020 and 22 May 2020) separately rather than combined, following the approach in Jama Academy Ltd v HMRC [2024] UKFTT 302 (TC) (68, 71-72). Both amendments were found to be in Timco's favour (72).
The Tribunal found no basis for calculating CJRS claims using invoices, as Timco had done, concluding this was likely based on a misunderstanding (73). The Tribunal also rejected Timco's submission that it had not received the amounts HMRC said it received, noting the bank statements matched HMRC's figures, and Timco provided no contrary evidence (75-76).
Outcome
The Tribunal dismissed the appeal and confirmed the assessments, as varied on review, to a total amount of £24,182.36 (77).
HMRC had requested that the Tribunal exercise its power under TMA 1970, s 50(7) to increase the assessments from £23,800.36 as originally calculated to £24,182.36 as determined on review; the Tribunal exercised this power if necessary, with the same outcome (78).
The Tribunal noted there was no suggestion that Timco deliberately claimed more than it was entitled to, and HMRC had decided not to charge a penalty, but found that Parliament required wrongly claimed amounts to be repaid (79).
Major issues / areas of contention
- Whether Timco's two employees were 'fixed rate employees' under Paragraph 7.6 of the Direction, which the Tribunal found they were not (65).
- The correct method for calculating the reference salary of variable rate employees under Paragraph 7.2 of the Direction, using the higher of the average daily rate or the lookback method (66-67).
- Whether HMRC's two amendments on review, excluding post-20 March 2020 payments from the average daily rate calculation and calculating combined claim periods separately, were correct (68-72).
- Whether Timco's method of calculating claims using 80% of invoiced amounts from the prior year had any legal basis, which the Tribunal found it did not (73).
- Whether Timco had shown it received different amounts than those recorded by HMRC, which the Tribunal rejected for lack of evidence (75-76).
- Whether to proceed with the hearing in the absence of the Appellant's representative (7-12).