Thames Valley Renovations had applied for Construction Industry Scheme (CIS) gross payment status. The taxman turned down their application as the directors had filed their personal self assessment tax returns late.
Their accountant had advised them that as they didn’t have any income they didn’t have to file a Tax Return. He also told them to ignore the late filing penalties notices for the same reason. The directors tried getting HMRC to issue fresh tax returns to complete, but the taxman had the wrong address so they didn’t receive them. They were unable to file the outstanding tax returns online.
The First Tier Tax Tribunal decided that the directors had reasonable excuses for filing their returns late. They had acted reasonably when they relied on their accountant’s advice and they tried to rectify matters as soon as they realised the advice had been incorrect.
Thames Valley Renovations appeal was allowed and they got gross payment status.
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