The FTT has dismissed the taxpayer’s appeal against HMRC’s refusal notice under the Income Tax Construction Industry Scheme (CIS) Regulations 2005.

The taxpayer argued that it exercised “reasonable care” to comply with its CIS obligations in line with Regulation 9(3) of those Regulations thus should be relieved from paying over to HMRC amounts of tax under-deducted on payments made to sub-contractors.

Agreeing with HMRC, the FTT dismissed this argument on the basis that the taxpayer ought reasonably to have been aware that there were some tax implications when payments were made to sub-contractors, and should have taken steps to investigate what those implications were.

This decision marks yet another in a long line of FTT decisions on the standard of care required of taxpayers. Importantly, the FTT confirmed that to demonstrate reasonableness, it is not an immutable requirement to appoint professional advisers; rather, it may be sufficient to rely on HMRC guidance or knowledgeable staff.

Arthur Wong acted for the taxpayer.

You can read a copy of the judgment here.

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