HMRC had revoked the CIS gross payment status of Mr Kincaid (trading as AK Construction) for a limited period. During that period the business suffered negative cash flow, as he was receiving income net of CIS deductions but having to make payments gross. His status was reinstated for a while, but because of the negative cash flow he had by then got in arrears with HMRC. HMRC then withdrew his gross payment status again, as he had failed both the “basic compliance” and the “reason to expect” tests.
The Tribunal found that the appellant had a “Reasonable Excuse” for non-payment of the tax, as cash flow problems can amount to a “Reasonable Excuse” for non payment of tax; especially when those problems were caused by the taxman withdrawing gross payment status.
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