HMRC’s discretion was not unlawful

The taxpayer company was set up to carry out a one-off residential development. It made payments to construction services companies without deduction of tax under the construction industry scheme (CIS). It accepted that it was required to make such deductions but appealed against the determinations raised by HMRC to recover the tax.

The taxpayer argued that HMRC had not followed its own guidelines when raising the determinations. It said that HMRC should have followed the guidance in its manual (COG909400) and consider the possibility of granting relief under regulation 9(5) – ie relieving the company of its obligations to make CIS deductions. 

The First-tier Tribunal decided that its jurisdiction was limited to whether or not CIS deductions were due and the quantum of such deductions. It considered that the question of whether HMRC should have used its discretion under regulation 9(5) was a public law matter and that the tribunal had no...