The Commissioners for HMRC v Marc Gunnarsson

Eligibility for the Self-Employment Income Support Scheme depends on the statutory conditions, not on a claimant’s honest belief or understanding of HMRC guidance. A person who provides services through a trading limited company is not thereby carrying on that trade personally. The company is a separate legal person, and the individual’s receipts may be dividends or employment income rather than trading income. Non-binding guidance may assist with statutory construction only where the legislation is ambiguous. Guidance or generic HMRC communications cannot create entitlement contrary to the legislation without a clear and unambiguous assurance capable of founding a legitimate expectation.

HMRC appealed against the First-tier Tribunal’s decision of 4 April 2024 concerning two payments made to Marc Gunnarsson under the Self-Employment Income Support Scheme. The FTT allowed the appeal in relation to the first payment but dismissed it in relation to the second, relying principally on the claimant’s honest belief and the changing wording of HMRC’s guidance.

The Upper Tribunal considered whether the FTT had failed to apply the statutory eligibility criteria, whether it had misinterpreted the guidance, and whether any legitimate expectation could preserve the first payment. It also considered whether the decision should be remade or remitted.

1. Appeal allowed. The FTT decision was set aside for material errors of law and remade. The assessment recovering both SEISS payments was confirmed.
2. The FTT failed to apply paragraphs 3 and 4 of the Schedule to the First SEISS Direction. HMRC’s guidance was non-binding and could assist construction only if the legislation was ambiguous. The statutory eligibility provisions were clear.
3. At the dates of both claims, the Respondent was not carrying on a trade personally. He was the director and shareholder of Machinegun Web Development Limited, a separate legal person which carried on the business. The Upper Tribunal endorsed and applied the analysis in Joshua Taylor v HMRC [2022] UKFTT 304 (TC).
4. The Respondent’s receipts were dividends or employment income, not trading income under Part 2 of ITTOIA 2005. He therefore failed the conditions requiring him to carry on a trade adversely affected by coronavirus, to have carried on a trade in 2019/20, and to intend to continue carrying on a trade in 2020/21.
5. The Respondent’s honest belief was irrelevant. The legislation contained no subjective belief test. Nor did HMRC’s guidance, emails or online portal provide a clear and unambiguous assurance that he was entitled to payment. Any legitimate-expectation argument was procedurally unavailable, outside the relevant appellate jurisdiction or lacking in substance. The principles in R v IRC ex p MFK Underwriting Agencies Ltd [1990] 1 WLR 1545, Aozora GMAC Investment Ltd v HMRC [2019] EWCA Civ 1643 and the other authorities considered supported that conclusion.
6. The matter was remade in the Upper Tribunal because the relevant facts were available and undisputed. The Respondent’s appeal against HMRC’s assessment was dismissed.

• First-tier Tribunal (Tax Chamber): Decision dated 4 April 2024. The appeal was allowed in relation to the first SEISS payment and dismissed in relation to the second.
• Upper Tribunal (Tax and Chancery Chamber): HMRC’s appeal allowed. The FTT decision was set aside and remade. The Respondent’s appeal against the assessment was dismissed and recovery of both payments confirmed.