Unreasonable excuse

The taxpayer company a roofing and cladding business applied for gross payment status under the construction industry scheme.

HMRC rejected the application on the grounds corporation tax due on 1 January 2011 was not paid in full until 1 July 2011 and the tax due on 1 January 2012 had also been paid late.

The company claimed it had reasonable excuse for the purposes of FA 2004 Sch 11 para 12(3): its adviser believed the firm had paid sufficient construction industry scheme tax to cover the January 2011 corporation tax. Failure to pay the January 2012 tax on time was because of cashflow problems caused by the business not being registered for gross payment.

The First-tier Tribunal said reliance on a third party may be a reasonable excuse but not necessarily.

In this instance the taxpayer was entitled to rely on its agent’s incorrect...