Wide discretion

The taxpayer company was registered for gross payments under the construction industry scheme (CIS); it was often late paying its PAYE tax and National Insurance due to cashflow problems.

HMRC carried out a review of the taxpayer’s CIS status on three occasions. Officials agreed not to withdraw gross payment in 2009 and 2010; after the third review the tax department said it would proceed with cancellation.

The company appealed claiming the taxman’s action was disproportionate and the loss would have a detrimental effect on business.

The First-tier Tribunal noted that the taxpayer did not dispute that there had been compliance failures in the relevant period July 2010 to June 2011.

The judge said there was no reasonable excuse for the failures and HMRC were entitled to take into account that there had been failed compliance reviews on previous occasions.

But the judge decided that the...