Two and a half years after the Coronavirus Job Retention Scheme (CJRS) was first introduced, one of the first cases concerning overpayments has now been heard at the First Tier Tribunal. Although the employer considered that their claim was within the spirit of the rules, as it did not fall within the requirements set out in guidance and legislation they will now have to pay back over £20,000 of CJRS support.

Background

The case concerns the CJRS claims for two employees who were recruited by a business manufacturing and supplying contract furniture in early February 2020. They both started work on 24 February 2020, a few days after the employer’s cut off for processing payroll for that month. As a result, they were not included in the employer’s February payroll, and the first payments in respect of them were reported to HMRC the following month on 25 March 2020.

Following the first national lockdown on 20 March 2020, both employees, along with almost 130 other staff, were furloughed. The company claimed in the region of £20,000 for these two individuals for a total of seven months, assuming that they were eligible for furlough.

CJRS rules

The CJRS was first announced on 20 March 2020. There were a number of requirements which had to be met for employees to qualify for the scheme, one of which was that they had been included on a payroll filed by 28 February 2020. This date was later changed to 19 March 2020 to enable more employees to be included in the scheme, following concerns that people who had recently moved roles would be excluded.

The company directors, who were described as honest and straightforward in the judgement, explained that based on their understanding of the date change and the guidance issued at the time they considered that these two employees could now be claimed for. They considered that they had followed the guidelines – which had changed frequently over the duration of the CJRS – as best as they could and had believed that the claims were valid. Although the claims had now been identified as not meeting the specific requirements, they considered that the claims were within the spirit of the CJRS.

Decision

Although the judge had some sympathy for the company’s position, they concluded that there was no way that the two employees could be brought within the conditions for furlough. The first RTI submission made to HMRC which contained their details was made after the 19 March 2020 cut-off date and thus did not meet the legal requirements of the scheme. Accordingly, the company has been ordered to repay the claims.

Conclusion

This is likely to be the first of many more cases relating to the CJRS, as HMRC continues their compliance activities. Although the tribunal had sympathy with the employer, who had along with many other employers had to keep up with a large amount of rapidly changing guidance and instructions, the tribunal could not rule something as within the ‘spirit’ of the rules but has to look strictly at the facts. Since the tests were not met, the claim was found to be not valid.

Employers who took on employees around February 2020 may wish to review their claims to check if they have satisfied the RTI filing deadlines. Guidance on how to report an overclaim is available on the ATT website.