Nature of property business

HMRC imposed penalties under FA 2009 Sch 55 on the taxpayer for failure to make monthly construction industry scheme returns in respect of work relating to the renovation of a property. The taxpayer appealed. 

It said it ran a property investment business; it was not a developer and did not carry out construction operations within the meaning of FA 2004 s 57. It was the principal and had appointed another company to make the property alterations; it therefore was not required to file construction industry scheme returns.

The First-tier Tribunal said the main issue was whether the taxpayer was the contractor. The judge referred to Mundial Invest SA Ltd v Moore [2006] STC 412 and HMRC’s Construction Industry Scheme Reform manual CISR12080 for guidance. He noted the taxpayer was in the investment business before the property was converted. Mundial on the other hand had developed...