Pay increase was decided retrospectively

The taxpayer had one employee Mr Puttock. In February 2020 his salary was increased from about £500 a month to £2 000 a month. His adviser told him he could claim under the coronavirus job retention scheme (CJRS). In its March 2020 real-time information (RTI) return the taxpayer reported a salary of £550 paid to the employee but this was amended at the end of March to show £2 000 and his claim was based on this sum.

HMRC said there was no evidence of any ‘valid reason’ for the increase in pay. Mr Puttock considered it was ‘unrealistic’ for him to record a conversation about his increased salary given he was both employer and employee. However he accepted that ‘with hindsight’ he should have recorded the decision.

The First-tier Tribunal did not accept Mr Puttock’s evidence. The burden of proof was on him...