Glen Contract Services Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 August 2010 |
| Neutral Citation | [2010] UKFTT 391 (TC) |
| Date | 19 August 2010 |
| Court | First Tier Tribunal (Tax Chamber) |
[2010] UKFTT 391 (TC)
John M Barton, WS (Chairman), Eileen Sumpter (Member)
Derek J Smith, BA CA, Rennie Smith & Co, Chartered Accountants, for the Appellants
William Kelly, HMRC, for the Respondents
Income tax - construction industry scheme - appeal against removal of gross payment status- no reasonable excuse - appeal dismissed
1. In this appeal by Glen Contract Services Limited ("Glen"), a subcontractor within the Construction Industry Scheme, the Tribunal finds that that HM Revenue & Customs ("HMRC") acted in accordance with the provisions of Finance Act 2004 section 66s. 66 of the Finance Act 2004 in cancelling Glen's registration for gross payment status, and the appeal is accordingly refused.
2. On 3 March 2009 HMRC wrote to Glen detailing their compliance failure and advising that the company status would be changed from "gross" to "payment under deduction" with effect from 90 days from the date of the letter.
3. On 26 May 2009, Rennie Smith & Co wrote on behalf of Glen intimating an appeal against the said decision.
4. HMRC wrote to Glen on 1 March 2010 upholding the decision
5. On 10 March 2010, Rennie Smith & Co wrote to HMRC requesting review and giving further information for consideration.
6. HMRC replied on 13 April 2010, upholding the decision.
7. A formal Notice of Appeal was lodged on 12 May 2010.
8. The appeal was set down for hearing on 16 July 2010. Glen was represented by Mr Smith and he was accompanied by Mr and Mrs Kennedy, directors of Glen. HMRC was represented by Mr Kelly. There was no formal evidence at the hearing although both Mr and Mrs Kennedy did supply some background information in the course of Mr Smith's submissions.
9. The productions before the Tribunal included the following:
Profit and Loss Account for two years to 30 April 2009.
Bank Statements.
Letter from Bank of Scotland confirming overdraft facility.
Print outs from Companies House.
Copy correspondence.
HMRC publications.
10. The material facts were not in dispute and are as follows-
11. Glen is a company engaged in commercial cleaning. A small proportion of the workload is work identified in Finance Act 2004 section 74s. 74 of the Finance Act 2004 as coming within the definition of "construction operations".
12. In 2008, HMRC took a decision to withdraw Glen's gross payment status, but following representations, a fax was sent to Rennie Smith & Co on 2 June 2008 intimating that Glen's gross payment status would remain. That communication concluded with the following "this Appeal has been upheld in the above company's favour in this instance by concession. All future Appeals will be accepted only if the failure reasons fall under the grounds of "reasonable excuse" as contained in Taxes Management Act 1970 Taxes Management Act 1970 section 118 subsec-or-para 2s. 118(2)".
13. Since 2008, Glen's overdraft facility with the Bank of Scotland has been limited to £66,000, representing an actual limit of £60,000 with a 10% tolerance level beyond that "to allow occasional excesses pending receipt of confirmed inward payments".
14. On 14 April 2009, HMRC carried out a scheduled review of Glen's compliance history, covering the period from 22 February 2008 to 22 February 2009. This review disclosed two late payments of CIS/PAYE, namely-
The payment due on 22 October 2008 was paid on 6 November 2008 (15 days late)
The payment due on 22 November 2008 was paid on 12 December 2008 (20 days late)
These failures resulted in HMRCs decision to remove Glen's gross payment status.
15. A Statement of Account from the Bank of Scotland over the period from 21 to 29 October 2008 showed an overdraft of £61,979.36 reducing to £55,535.57, with an excess overdraft fee of £30 having been debited on 27 October 2008. A further Statement over the period from 20 to 25 November 2008 showed an overdraft of £58,134.98 reducing to £54,805.00 on 24 November, and increasing to £57,370.13 on the following day.
16. HMRC subsequently ran a "reason to expect" test which disclosed the following:
The payment due on 22 May 2009 was paid on 29 May 2009.
The payment due on 22 June 2009 was paid on 3 July 2009.
The payment due on 22 July 2009 was paid on 8 August 2009.
The payment due on 22 August...
To continue reading
Request your trial
-
Industrial Contracting Services Ltd
...Express Agency [2010] UKFTT 55 (TC); [2010] TC 00368 (f) Getty [2010] UKFTT 251 (TC); [2010] TC 00546 (g) Glen Contract Services Ltd [2010] UKFTT 391 (TC); [2010] TC 00673 (h) Connaught Contracts [2010] UKFTT 545 (TC); [2011] TC 00798 Undisputed Facts 10.Mr I. Harrison is the Director of th......