FTC/03/2013 - HMRC v Anthony Bosher
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Warren, Chamber President |
| Judgment Date | 19 November 2013 |
| Neutral Citation | [2013] UKUT 0579 (TCC) |
| Respondent | ANTHONY BOSHER |
| Appellant | REVENUE AND CUSTOMS |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/3/2013 |
[2013] UKUT 0579 (TCC)
CONSTRUCTION INDUSTRY SCHEME – fixed and month 13 penalties —late filing
of returns – no reasonable excuse – proportionality of penalties – whether within wide
margin of appreciation — interpretation of s 100B Taxes Management Act 1970 — Human
Rights Act 1998 – appeal allowed
IN THE UPPER TRIBUNAL FTC/3/2013
TAX AND CHANCERY CHAMBER
BETWEEN THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and -
ANTHONY BOSHER Respondent
Tribunal: Mr Justice Warren, Chamber President
Judge Colin Bishopp
Sitting in public in London on 5 and 6 November 2013
Hui Ling McCarthy, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs for the Appellants
Keith Gordon and Ximena Montes Manzano, counsel, instructed by Mazars LLP, for the
Defendants
© CROWN COPYRIGHT 2013
DECISION
Introduction
1. This is an appeal from a decision (“the Decision”) of the Tax Chamber
(Judge Aleksander and Susan Hewett - “the Tribunal”) released on 8 October 5 2012. Mr Bosher’s appeal to the Tribunal was against penalties of £54,100
imposed on him by HMRC for his failure to make monthly returns by the due date
under the Construction Industry Scheme (“CIS”). The Tribunal allowed Mr
Bosher’s appeal and cancelled 193 fixed penalties of £100 each on the grounds
that they were disproportionate. The central issue on HMRC’s appeal before us is 10 whether the Tribunal had the jurisdiction to cancel these penalties. HMRC say
that there was no jurisdiction to do so. But even if there was, they submit that the
penalties were proportionate and that the Tribunal should not have interfered with
them.
The legal framework and the penalty regime 15
2. The CIS is a tax compliance scheme for businesses operating in the
construction industry. This is an industry that has traditionally attracted a large,
itinerant workforce and often involves “cash in hand” transactions. Historically,
this resulted in a significant loss of tax and national insurance contributions
because many sub-contractors engaged in the construction industry “disappeared” 20 without settling their tax liabilities, with a consequential loss of revenue to the
Exchequer. The solution was described by Ferris J in Shaw (Inspector of Taxes) v
Vicky Construction Ltd [2002] STC 1544 at [4]:
“In order to remedy this abuse, Parliament enacted legislation, which goes
back to the early 1970s, under which a contractor is obliged, except in the 25 case of a sub-contractor who holds a relevant certificate, to deduct and pay
over to the Revenue a proportion of all payments made to the sub-contractor
in respect of the labour content of any sub-contract. The amount so deducted
and paid over is, in due course, allowed as a credit against the sub-
contractor’s liability to the Revenue.” 30
3. The legal basis of the CIS, as it has been in force from 6 April 2007, is ss
57-77 of the Finance Act 2004 (“FA 2004”) and the Income Tax (Construction
Industry Scheme) Regulations 2005 (SI 2005/2045) (the “2005 Regulations”). As
Ferris J said, the CIS requires certain payments by contractors to sub-contractors
to be made subject to deduction of tax, but the sub-contractors are entitled to 35 claim credit for tax withheld under CIS against their tax liability for the tax year
in question.
4. Contractors are required to make a return no later than 14 days after the end
of every tax month (a “monthly return”) (s 70 FA 2004 and reg 4 of the 2005
Regulations). For these purposes, a tax month means the period beginning with 40 the 6th day of a calendar month and ending on the 5th day of the following month.
So a monthly return must be received by HMRC no later than the 19th day of the
month. Nil returns are also required (s 70 FA 2004 and reg 4(10) of the 2005
Regulations).
To continue reading
Request your trial