Absolved from liability

The taxpayer company made an error under the construction industry scheme in its operation of tax deducted on payments to subcontractors. It did not tax parts of payments relating to travel and accommodation expenses.

HMRC issued determinations to collect the underpaid tax.

The firm’s accountant requested that the Revenue make a direction under the Income Tax (Construction Industry Scheme) Regulations 2005 reg 9(5) absolving the taxpayer from having to pay the additional tax. Under reg 9(5) an HMRC officer can relieve the taxpayer of paying shortfall of tax if one of two conditions is fulfilled.

In this instance the accountant said condition A was satisfied. It required the Revenue to accept an error had been made in good faith and that the taxpayer had taken reasonable care to comply with legislation.

The First-tier Tribunal noted that further evidence had been produced since the appeal which...