Incorrect advice

A construction company applied for gross payment status. HMRC refused the application on the ground that the directors of the company had failed to meet their obligations with regard to their personal tax affairs because they had filed their self assessment tax returns late.

The taxpayers asked their accountant about their personal tax returns who advised them that as they had no income they did not need to file a tax return. The accountant also told them to ignore the late filing penalties they received for the same reason.

However when the directors applied for gross payment status they were told by HMRC that because their personal tax returns were outstanding this would not be granted.

The directors therefore tried dealing with HMRC to obtain new copies of the relevant tax returns to complete but the department had...