A property investment company wrongly claimed more than £75,000 in coronavirus job retention scheme support.

The First Tier Tribunal (FTT) made the ruling despite HMRC missing the court filing deadline by 48 hours.

HMRC filed notices of assessment against Ark Angel Limited under paragraph 9 of Schedule 16 Finance Act 2020 (FA 2020) for £59,664.54 for the 2020-21 tax year and £16,000 for the 2021-22 tax year.

Ark Angel, the appellant appealed against two assessments made by HMRC related to money owed from coronavirus job retention scheme (CJRS) for two employees.

Two employees were furloughed on 17 April 2020, but both individuals started to work for a company linked to the appellant in December 2020, incurring an income tax liability from Ark Angel.

On 18 December 2023, a tribunal told the two parties to agree on what Ark Angel should owe to HMRC, with a final submission date of Wednesday 31 January 2024. But HMRC was late with this, filing it on Friday 2 February.

Tribunal judge Mark Baldwin said: “The delay was very short and did not cause any inconvenience.

“The delay is regrettable, but Mr Marks [on behalf of HMRC] has apologised for this. Most importantly, we consider that to reach balanced conclusions on all the issues before us, we need to take account of both sets of submissions.

“Accordingly, whilst we absolutely agree with Mr Boparai that the rules are there to be followed and should be observed, we do not consider that we would be acting fairly or justly if we did not admit HMRC’s submissions.”

The two Ark Angel staff had worked for the company on an ad hoc basis from 2019, but signed contracts just before CJRS support was announced on 20 March 2020.

The company arranged for them to sign contracts dated 27 February 2020, stating that their salaries would be £3,200 a month, on a three-month contract.

On 1 March Ark Angel told the staff to stop working, later being informed their period of furlough began on this date.

In a letter to HMRC, Kulvinder Boparai wrote: “The earlier payments in 2019-20 to the employees were not payments for any regular work or wages, there was no contract in place because it was irregular/ad hoc payments being taken when needed by the employees but crucially for not doing any particular work – I think historically we would be considered the bourgeoisie by the Russian state.

“Para 7.3 tells the employer to ignore these payments when calculating the employees reference salary.”

HMRC considered the furlough period started from 17 April, not 1 March, as that is when the confirmation of the CJRS scheme was sent to Ark Angel in writing.

Paragraph 6.7 of the CJRS scheme stated: “An employee has been instructed by the employer to cease all work in relation to their employment only if the employer and employee have agreed in writing… that the employee will cease all work in relation to their employment.”

The FTT judges used this in assessing when the period of furlough began, agreed with HMRC’s position.

But Boparai argued that to be informed in writing of the confirmation of the CJRS scheme being applied was just ‘record keeping’, which Baldwin said he ‘cannot accept’.

The appellant’s two staff members in question were employed through the 2019 year, with PAYE records to show it. However, the pair received just £1,095 and £2,296 throughout the whole year.

Tribunal judge Baldwin said: “As we have found that the employees were employed by Ark Angel throughout the 2019-20 tax year and their period of furlough did not begin until 17 April 2020, their reference salary falls to be calculated by averaging the amounts paid to them by Ark Angel in the 2019-20 tax year over the whole of that year.”

On top of this one of the employees was working for two companies linked with Ark Angel named Greenwich, and Grosvenor, with this employment starting in December 2020. The employee was also furloughed from both companies. However, it was determined that the employee did not work for either company during the period of furlough at Ark Angel.

The appeal from Ark Angel was dismissed leaving it up to HMRC and the appellant to reach agreement on how much should be paid.