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The taxpayer was a small electrical business, which, despite suffering financial difficulties during the recession, always paid its taxes on time.
The firm engaged N&N as a subcontractor in March 2009. As the result of an error by the office administrator, payments were made to N&N without tax being deducted.
HMRC discovered the mistake during a compliance visit and refused the taxpayer’s application for payments to be made to its subcontractor gross.
The taxpayer appealed.
The First-tier Tribunal was satisfied that PDF had taken reasonable care to comply with the construction industry scheme, and that the administrative error had been made in good faith.
Indeed it was the only mistake the business had made under the scheme in ten years.
The judge decided that the refusal notice should not have been issued and ordered that the taxpayer’s application be accepted.
The taxpayer’s appeal was allowed.
