Cormac Construction Ltd v R & C Commissioners

The case concerns reasonable excuse

FTT [2009] UKFTT 380 (TC), TC00315

A small construction company had registered for gross payment status' within the construction industry scheme.

In 2008 HMRC cancelled its registration on the grounds that it had made eight tax payments after the due dates. The company’s paperwork and CIS payments/returns were dealt with by the wife of the director/shareholder of the company; she had three young children and a full-time job.

She had erroneously believed that the due date for the company’s CIS payments to be the 28th of the month, rather than the 22nd.

The company appealed against its loss of gross payment status, contending that it had a reasonable excuse because in May 2007 their eight-year-old daughter had suffered a double fracture of her leg and had subsequently suffered serious illness, requiring treatment in hospital, before being diagnosed with epilepsy.

The First Tier Tribunal allowed the company’s appeal, observing that the secretary had difficulties 'balancing childcare with full-time work' and that three of the late payments had been made within 14 days of the due date.

Brooks J held that C should 'be treated as complying with its obligations and as having satisfied the compliance test'.

As an aside, it was noted that the mistaken and unfounded belief that the due date for payment was the 28th rather than 22nd would not have represented a reasonable excuse.