Parkside Nail Supplies Ltd v The Commissioners for HMRC

This is an application made by the Respondents (‘HMRC’) under Rule 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (‘the Tribunal Rules’) for the appeal brought by Parkside Nail Supplies Ltd (‘Parkside’) to be struck out on the basis that there is no reasonable prospect of their case succeeding.

The hearing lasted half a day. The documents to which I was referred were contained within the 424-page document bundle, 188-page supplementary bundle and skeleton arguments from both parties.

The Tribunal’s decision, granting HMRC’s application for the appeal to be struck out, was given orally at the end of the hearing. Parkside requested full reasons for that decision on 20 April 2025, which are set out below.

Parkside was incorporated in September 2003 and engaged in the wholesale trade of beauty products. The appeal concerns assessments totalling £25,555.38 issued under Paragraph 9 of Schedule 16 to the Finance Act 2020, relating to claims made under the Coronavirus Job Retention Scheme (‘CJRS’) for the tax years ending 5 April 2021 and 5 April 2022.

The dispute centres on claims made by Parkside for an employee, Mr Hai Thanh Tran, between March and October 2020. HMRC contends that the company was not entitled to CJRS payments for Mr Tran because it failed to meet a fundamental eligibility requirement, namely the employee’s earnings were not reported in a Real Time Information (‘RTI’) submission on or before the critical date of 19 March 2020. RTI submissions for Mr Tran were not made until 30 September 2020.

HMRC argues that the CJRS scheme, as governed by a series of Treasury Directions, clearly stipulates that to qualify for support payments, an employee must have been included in an RTI return by the relevant date. This requirement is not discretionary and has been upheld in previous First-tier Tribunal decisions, including Carlick Contract Furniture Limited v HMRC [2022] UKFTT 00220 (‘Carlick’) and Raystra Healthcare Limited v HMRC [2023] UKFTT 496 (‘Raystra’), both of which emphasised that the Tribunal has no jurisdiction to override the statutory criteria based on fairness or hardship.

HMRC contends that even if the delay was not the company’s fault, the law does not provide for exceptions in such circumstances. They also contend that no CJRS claims were made for the director, Mr Son Thanh Tran, during the relevant period, and no assessments were issued in relation to him which could be considered.

HMRC submits that the appeal should be struck out under Rule 8(3)(c) of the Tribunal Rules, as the company cannot meet the statutory conditions for CJRS entitlement and therefore has no realistic prospect of success.

The company disputes HMRC’s assessment, arguing that the payments were legitimate and that any technical failures in RTI submissions should not invalidate their claims.

The company contends that the employee in question was genuinely employed and paid before the CJRS eligibility cut-off date of 19 March 2020. They refer to evidence including payslips, bank statements, and audit logs from their payroll software (QuickBooks), which show that payroll entries and submissions were made before the deadline. However, due to a technical issue in QuickBooks, RTI submissions from September 2019 onwards were blocked. This issue was only discovered and corrected in September 2020.

Parkside also refers to the severe financial hardship it faced due to the pandemic. The director took out personal loans to cover rent arrears, secured a government-backed Bounce Back Loan, and ultimately had to close the business in March 2024. The company argues that requiring repayment of the CJRS funds would impose further hardship, contrary to the purpose of the scheme.

Additionally, they argue that Parkside’s director did not claim under the CJRS for himself until November 2020 due to a lack of professional advice. Parkside estimates that he underclaimed approximately £16,110, which they argue should be offset against any overclaimed amount, reducing the liability to £9,445.38.

Parkside contends that HMRC’s rigid reliance on RTI data ignores substantive evidence of actual wage payments and undermines the CJRS’s intent to support struggling businesses. They urge the Tribunal to consider the full context, including the technical issues and financial impact, and either uphold the validity of their claim or reduce the repayment accordingly.

Rule 8(3)(c) of the Tribunal Rules provides that:

“(3)

The Tribunal may strike out the whole or a part of the proceedings if—

…

(c)

the Tribunal considers there is no reasonable prospect of the appellant's case, or part of it, succeeding.”

I must consider whether there is a realistic, as opposed to a fanciful, prospect of succeeding on the issue at a full hearing, see Swain v Hillman [2001] 1 All ER 91. A realistic claim is one that carries some degree of conviction and is more than merely arguable, see ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8].

I accept HMRC’s submissions regarding the director, Mr Son Thanh Tran, that no claims for CJRS have been made, no assessments have made, and therefore there is no appealable matter in relation to the director.

Regarding the appeal against the assessments relating to Parkside’s employee, Mr Hai Thanh Tran, I have carefully considered the relevant CJRS provisions, which have been helpfully set out by Judge Poole in Carlick at [12] onwards, and I agree with the following conclusions reached in that decision at [37] onwards:

“Whilst I have every sympathy with the Appellant’s position, the legislation is quite clear: for payments to (or in respect of) an employee to qualify under the CJRS, payment of earnings to that employee must have been included in an RTI PAYE submission not later than [the relevant date]…

39.

As to the Appellant’s argument that the claims were in line with the “spirit” of the CJRS, and it would be unreasonable to exclude them on a technicality such as this, it is clear that this Tribunal has no jurisdiction to entertain such an argument. Its role is to adjudicate on the law and whilst there is some debate about the extent to which “public law” arguments on reasonableness and fairness can properly form part of the Tribunal’s decision-making process in some circumstances, there does not seem to me to be any scope for such arguments here, where the Directions draw such a clear bright line to determine eligibility for the scheme.”

Parkside accepts that no RTI submissions were made prior to 19 March 2020, in respect of their arguments relating to Mr Hai Thanh Tran or Mr Son Thanh Tran. I consider this to be a critical and determinative fact. The Treasury Directions set out a clear and unambiguous requirement that earnings must be reported in an RTI return by the relevant CJRS date, which is 19 March 2020.

I agree with the conclusions reached in Carlick and Raystra that the Tribunal must apply the statutory scheme as enacted and cannot entertain arguments based on fairness or the spirit of the CJRS where the legislative criteria are not met. There is no discretion or exception provided for late submissions, regardless of the reasons. Having failed to meet the RTI requirements relating to both Mr Hai Thanh Tran and Mr Son Thanh Tran, I am satisfied the assessments under appeal were correctly issued under Schedule 16 to the Finance Act 2020.

In my view, there is no reasonable prospect of this appeal succeeding and the appeal is therefore struck-out pursuant to Rule 8(3)(c) of the Tribunal Rules.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.