Aim of the regime is to encourage compliance

The taxpayer had failed to submit its corporation tax return for the year to 31 March 2010 and that there had been other failures at that time in respect of corporation tax returns construction industry scheme returns and a P35 return. HMRC accepted that the company had a reasonable excuse for failing to submit contractor’s monthly returns on time but did not consider this was true for the other compliance failures.

The taxpayer appealed but HMRC requested that the appeal be stayed behind JP Whitter (Water Well Engineers) Ltd v CRC [2018] STC 1394 in which the Supreme Court decided in favour of HMRC. As a result of that decision HMRC withdrew the taxpayer’s gross payment status under the construction industry scheme.

The taxpayer agreed the outcome of the review in 2012 was technically correct but said HMRC’s proposal to withdraw gross payment status...