Taxpayer Grilled Over CJRS Claims

This article looks a recent tribunal judgment relating to the Coronavirus Job retention Scheme (CJRS).

In Aemtrie Limited & others v HMRC the three appellants, Aemtrie Ltd, Aemyrie Holdings Ltd, True Wood Grills Ltd, who were related companies under common control, faced scrutiny over their CJRS claims. The tribunal found their claims were contrary to the scheme’s purpose and increased HMRC’s assessments, ultimately dismissing the appeal.

The case’s background traced Mr. Walsh’s journey in establishing several companies specialising in luxury BBQ equipment. Following CJRS claims made by the appellants, discrepancies arose regarding employment contracts, continuity of employment, and remuneration practices. Questions also arose as to whether the employment contracts were a sham.

In short, HMRC had challenged CJRS claims on several points, but in particular:

1. That claims based on Mr Walsh’s contractual fixed salary were not valid because Mr Walsh had waived his fixed salary and as such, any claims should be based on the payments that were actually made.
2. That claims under the CJRS based on increased salaries (following a redundancy and re-engagement process) were contrary to the aim of the CJRS and the redundancies were motivated by facilitating CJRS claims rather than business circumstances.

The tribunal agreed with HMRC that furlough payments should be based on actual payments made not waived payments. They also concluded that Mr. Walsh and Ms. Walsh’s redundancy from the companies was influenced by CJRS benefits rather than genuine business needs. It emphasised the scheme’s intention to reimburse pandemic-related costs and criticised the companies’ lack of genuine employment costs affected by the pandemic.

Ultimately, the tribunal dismissed the appeal, cautioning against stretching the boundaries of CJRS acceptability. The case highlights the risk of appealing to a tribunal, which, in this instance, led to a higher tax bill for the taxpayers. It serves as a reminder to act within the purpose of government support schemes rather than manipulating circumstances to access those schemes.