Claims for CJRS had to be based on salary at a specified date

The taxpayer claimed coronavirus job retention scheme (CJRS) payments during the period 1 April 2020 to 30 September 2021 in respect of Mr S an employee and director of the company. The claims were based on a salary of £2 500 a month but HMRC said they should have been based on £600 a month. The taxpayer appealed.

The evidence showed that throughout 2019 and up to 31 March 2020 Mr S’s taxable pay was £600 a month. However during that time the company had been paying dividends to Mr S at a rate of £2 500 a month – on the basis that Mr S would have been unable to live on his salary alone.

The taxpayer’s adviser said he suggested increasing the taxpayer’s salary to £30 000 a year from April 2020 to take account of the dividend payments. This was having regard to a...