It’s the economy

During 2007 the taxpayer company was late making payments under the construction industry scheme. HMRC withdrew the firm’s gross payments status. The company claimed it had a reasonable excuse.

The taxpayer had been in business since 2003 as a specialist roofing contractor. It worked exclusively for major house-building companies which were often late in paying subcontractors. The company also suffered a severe reduction in business in 2007 as the construction industry began to slow down.

The bank refused to extend the company’s overdraft facility so the directors gave up some of their salaries and approached their suppliers in the hope they would be patient in claiming payments due.

The First-tier Tribunal considered the evidence and decided the circumstances the company had faced were exceptional and led had directly to the compliance failures. The tribunal felt that matters were beyond the control of the company directors: i.e....