Took the right steps

Reasonable care to comply with the construction industry scheme

The taxpayer’s business was within the definition of a construction operation for the purposes of the construction industry scheme. He failed to deduct tax from payments to subcontractors. After an investigation HMRC said it would issue a determination under reg 13(2) of the Income Tax (Construction Industry Scheme) Regulations 2005. The taxpayer claimed relief under reg 9 on the basis that he had taken reasonable care to meet his obligations.

HMRC refused. The taxpayer appealed saying it was unfair to collect tax from him rather than recover it from the workers he had employed. He had no knowledge of the tax system and was unaware that he was doing anything wrong. Further he had appointed an adviser who had not told him about his obligations.

The First-tier Tribunal noted that the taxpayer had a ‘limited formal education’ as...