G Bushell v HMRC

FTT [2010] UKFTT 577 (TC), TC00827

Mr Bushell was a builder who usually worked alone but engaged the services of two sub-contractors for the period from August to November 2007.  He resumed working on his own again in December 2007 and did not use any sub-contractors again until August 2008.  At this point, he contacted HMRC by telephone and advised them that he would be engaging subcontractors again.

He did not submit any CIS returns for the period from December 2007 to August 2008.  HMRC sent him some blank CIS returns in November 2008.  

In December 2008, Mr Bushell submitted these returns for August to November 2008, and paid the tax due. He also telephoned HMRC to inform them that he had again stopped using subcontractors. 

In early 2009, HMRC imposed 134 penalties under TMA, s 98A, covering the period from August 2007 to December 2008, totalling £20,300.  Mr Bushell appealed, contending that he had told an HMRC officer in April 2008 that he was no longer using subcontractors. 

The First-Tier Tribunal reviewed the evidence in detail and observed that 'the failures were generally in respect of months in which he had no contractors working for him, and for which the returns would thus have been nil returns'. 

Judge Hellier noted that FA 2004, s 70 required returns from people 'who make payments under construction contracts'. He held that 'if a person is merely a contractor, but not a person who “makes payments” then the Regulations cannot make, and cannot be treated as making, any provision requiring him to make returns'. On the evidence, B had never submitted a return for October, November or December 2007. 

There was no reasonable excuse for his initial failure to do so, but his telephone conversation with an HMRC officer in April 2008 did constitute a reasonable excuse from the date of the telephone call.

For the periods from January 2008 to July 2008, the tribunal held that B was no longer a person who made payments within scope of FA 2004, s 70, and could not therefore be required to deliver returns. For the periods from August 2008 to October 2008, B had been required to deliver returns but had a reasonable excuse because he had not received the blank return forms from HMRC.