Taxpayer acted with reasonable care

The taxpayer was a family firm of which JH was the managing director. It contracted with clients in the construction industry to provide labour. The appeal concerned a period when it contracted with intermediary agencies and those agencies engaged the workers.

The taxpayer had treated the agencies as its own subcontractors and deducted tax from payments made unless the agencies had gross status under the construction industry scheme (CIS). In April 2014 new provisions were introduced which deemed workers to be employed by agencies if they were subject to ‘supervision direction or control’ by the agency. JH took advice on how these new rules would affect his business and concluded wrongly that he no longer needed to apply CIS to the payments made to the agencies because the workers were all being paid net of tax under PAYE. The taxpayer therefore...