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CJRS: For want of a payslip, the case was lost


The first tier tribunal found that back-dated payslips were not proof of earnings for coronavirus job retention scheme claims.

16th Jun 2023
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Zoe Shisha Events Ltd (ZSE) operated as a shisha bar at a London hotel from 2017. On the date it closed due to the coronavirus outbreak, ZSE had two staff on its payroll, the director Ms Zoe Muntean (ZM) and an employee Mr El Sayed (ES).

Initial claim

ZM made claims on behalf of ZSE under the coronavirus job retention scheme (CJRS) for the two accounting periods ending 31 August 2021.

The first year’s claim was based on a ‘reference salary’ as of 19 March 2020 of £3,000 per month for herself and £1,250 per month for ES; the latter year’s claim only included ZM.

HMRC queried the first claim, which spanned 12 March 2020 to 30 June 2020, in September 2020 and requested further information, which ZM supplied. This included payslips which showed gross pay received in January and February 2020 of £3,000 per month for ZM and £1,448 per month for ES.

Pay bump

After a few false starts where ZM ignored HMRC’s calls, thinking they were phishing attempts, HMRC spoke to ZM and requested details of her pay prior to January 2020. This turned out to be £600 per month, before (ostensibly, see below) being changed to £3,000 from January 2020. Similarly, ES was paid £800 prior to January 2020.

Assessments were raised for £9,060 for the year to 31 August 2020 and £5,835 for the year to 31 August 2021, relating to what HMRC believed to be inflated CJRS claims.

ZSE appealed the assessments to the first tier tribunal (FTT).

HMRC conduct

During the course of the hearing, HMRC came to agree that, based on bank statements provided to it, ES had in fact been paid £1,250 per month. The related assessment was withdrawn, leaving the FTT to decide purely on the amounts relating to ZM.

As well as appealing the assessments, ZM made several submissions relating to HMRC’s conduct, including that it had intentionally put her name on the assessments in place of the company’s to “damage [her] directly” and had referred to the wrong tax year (2020/21 rather than 2021/22). The FTT noted that the assessments were otherwise correctly made and valid, so merely stated that HMRC “ought to have taken more care” and moved on.

Backdated payslips

The main concern HMRC had raised was that ZM had received pay of £600 per month up until December 2019, before suddenly starting to take £3,000 per month in January 2020. This in itself wasn’t too odd, as salaries do of course change. However, the payslips showing the new £3,000 salary were not prepared until May/June 2020, after the CJRS was announced. Prior to that, there had been a gap in the Real Time Information (RTI) submissions.

Bank statements provided by ZSE also showed ZM as receiving more than £600 per month, but nowhere near the claimed £3,000.

ZM was asked about this by the FTT and stated that ZSE had parted from its accountants in August 2019 and had not found a replacement until May 2020, hence the gap in the RTI submissions. The shortfall in the bank statements was because January and February 2020 had been "difficult months”, meaning the full payment couldn’t be made.

Further, ZM claimed she had always intended to take £3,000 of salary per month, but the accountants had insisted it was more efficient to take £600 salary and the rest in dividends. She also admitted that the accountants who had prepared the payslips in May 2020 had advised that her CJRS claim may not be correct, but she had ignored them, thinking they were merely “jealous of the amount [she] received”.

Lack of evidence

The FTT noted several times that it did not consider ZM to be a credible witness, therefore it only accepted her evidence where it could be corroborated with other sources

Due to the lack of any contemporaneous evidence to support ZM’s claim that her pay had been increased in January 2020, the FTT concluded that her ‘reference salary’ was in fact £600 per month. It noted that the bank statements did show payments above this amount, however it assumed that the excess represented dividend payments.

ZM may, in hindsight, have wished that her salary had been increased in time to be treated as the ‘reference salary’. However the FTT was satisfied this had not, in reality, happened.

The appeal was allowed in respect of the element relating to ES but was otherwise dismissed.


Given the only real proof ZSE appeared to hold to support its case was created after the CJRS came in, it is little wonder that HMRC had a seemingly easy win here...