Helpline fail

The taxpayer company operated the construction industry scheme (CIS) for many years and engaged its own subcontractors.

The situation changed in 2010 when the business hired employment agency Lee Docherty Contractors Ltd (LDCL) which had CIS gross payment status meaning the taxpayer could pay for services without deducting tax.

The company’s bookkeeper left the firm in 2011 and was replaced by someone with no experience. She continued to make nil CIS300 returns on the basis her predecessor believed payments to LDCL did not need to be reported.

HMRC told the taxpayer that the amounts should be included even if they were paid gross.

The department imposed penalties and the company appealed saying the error arose...