The Commissioners for HM Revenue and Customs v J P Whitter (Water Well Engineers) Limited
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Warren,Judge Bishopp |
| Neutral Citation | [2015] UKUT 0392 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,13 July 2015 |
| Date | 13 July 2015 |
| Published date | 01 December 2016 |
[2015] UKUT 0392 (TCC)
Appeal number FTC/92/2012
INCOME TAX — construction industry scheme — cancellation of gross payment
status — s 66 Finance Act 2004 — HMRC discretion — scope of — whether
properly exercised — failure to take into account effect of cancellation on
appellant — appeal allowed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS Appellants
- and –
J P WHITTER (WATER WELL ENGINEERS) LIMITED
Respondent
Tribunal:
Hon Mr Justice Warren
Judge Colin Bishopp
Sitting in public in London in the Rolls Building on 1 December 2014
James Rivett, counsel, instructed by the General Counsel and Solicitor to HM
Revenue and Customs, on behalf of the Appellants
Thomas Chacko, counsel, instructed by Mr Ian Whalley, solicitor, on behalf of
the Respondent
© CROWN COPYRIGHT 2015
2
DECISION
Introduction
1. This appeal raises an issue about the scope of HMRC’s power to cancel a
taxpayer’s registration for gross payment under the construction industry scheme.
On 3 August 2011, HMRC issued a notice by which they cancelled the 5 registration of the Respondent (“the Company”) for that status. In their decision
released on 18 October 2012 (“the Decision”), the First-tier Tribunal, Judge
Cannan and Mr Whitehead (“the Tribunal”), held that HMRC should, when
exercising that power, have taken into account the fact (which they found) that
cancellation of the Company’s registration would have a significant detrimental 10 effect on its business. HMRC did not do so. The Tribunal held that this failure
was a failure to take into account a relevant factor so that HMRC’s decision “was
wrong in law and susceptible to review by this Tribunal”: see Decision [73]. They
allowed the Company’s appeal, deciding that they did not have jurisdiction to
substitute their own view based on the facts found and all relevant factors. 15
2. HMRC now appeal against those conclusions, contending that they did not
need to take account of the financial consequences for the Company when
exercising their power. If that is wrong, then they contend that the Tribunal did
have power to substitute their own view for that of HMRC and that we, on this
appeal, have the same power which we should exercise. The Company contends 20 that the Tribunal were right in all of their conclusions. However, so far as
jurisdiction is concerned, the Company submits that if it is the case that the
Tribunal had jurisdiction to substitute its own view, the appropriate course is for
us to remit the matter to the First-tier Tribunal and not to decide the matter
ourselves. 25
3. The facts as found by the Tribunal are set out in the Decision at [22] to [48].
We do not need to repeat them at length here. For present purposes, the following
is a sufficient summary taken from those paragraphs:
a. The Company carries on business, as its name implies, as water well
engineers. It drills boreholes and wells for water companies, 30 commercial and agricultural businesses and the domestic market. It
operates on a UK wide basis. It is very much in the nature of a family
business started by Philip Whitter in 1972 and was later incorporated
in the 1980s.
b. Prior to incorporation, and at all material times since, Mr Whitter and 35 the Company have used the services of Wilds Chartered Accountants.
Their services have included operating the Company’s payroll system.
c. The business has grown steadily and presently has about 25
employees, including a number of family members on the
administration side. In the three years to 2011 the business had a 40 turnover of approximately £4.4 million making a net profit over the
same period of about £180,000. Approximately £1.9 million of that
turnover derived from contracts with United Utilities. Other major
well known customers accounted for a further £900,000.
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