[2010] UKFTT 508 (TC)

TC00763

Appeal number: TC/2010/04985

FIRST-TIER TRIBUNAL

TAX 

	DAVID WILLIAMS	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	CHARLES HELLIER  (TRIBUNAL JUDGE)						PETER LAING			

Sitting in public in Cardiff on 28 September 2010

The Appellant did not appear and was not represented

Mr Mayo for the Respondents

© CROWN COPYRIGHT 2010

DECISION

1.	The tribunal was told that the appellant had phoned the tribunal centre and had said that he would not be attending or represented at the hearing. The tribunal was satisfied that the appellant had had notice the hearing and that it was just to proceed in his absence.
2.	The appellant appealed against the withdrawal of his gross payment status under the construction industry scheme (CIS) provisions of sections 60 to 67 FA 2004.
The statutory provisions
3.	Section 66 (1) provides that the board of the Inland Revenue (now HMRC) "may at any time and make a determination cancelling a person's registration for gross payment [under the CIS] it appears to them that: (a) if an application to register the person for gross payment was to be made at that time, the Board would refuse so to register him ..." [our italics].
4.	We note that section 66 (1) appears to confer a discretion upon the Board, rather than to provide for mandatory deregistration.
5.	Section 64 provides  the conditions for registration for gross payment. (Thus if a condition is not met the Board may exercise their powers under section 66 (1) (a)). In relation to individual a condition is that he has to satisfy the requirements of Part 1 of Schedule 11 to the Act. In paragraph 4 of that schedule (which sets out the "compliance test") it is made a condition that the taxpayer complies with all obligations imposed on him by the Tax Acts or the Taxes Management Act. Included in those obligations is an obligation to pay instalments on account of income tax on 1 January and 1 July in each year in amounts determined by those Acts.
6.	Regulations made under FA 2004 provided for circumstances in which a compliance test failure is to be disregarded. Potentially relevant to this appeal is the requirement to disregard a failure to meet the obligation to pay income tax if the payment is made not later than 14 days after the due date and the taxpayer has not failed to comply within the preceding 12 months (regulation 32).
7.	By section 118 Taxes Management Act a failure to do something may be disregarded if the taxpayer had a reasonable excuse not doing it.
The evidence and our findings of fact
8.	We had before us a bundle of correspondence between HMRC and the appellant and the appellant's notice of appeal. From those documents we find the facts recorded in this decision.
9.	The appellant did not dispute that he was required to make to payments on account, each of £756.90, on 31 January 2009 and 31 July 2009, or that the first of those payments was in fact made on 4 March 2009, 32 days late, and the second on 6 October 2009, 67 days late.
10.	In correspondence with HMRC the appellant's accountant said that the downturn had adversely affected  the appellant's business and that payments to him were being delayed. His turnover for the year to August 2009 was less than half that of the previous year. His margins were modest and the weather conditions had contributed to the deterioration.
11.	The bank statements from the appellant’s Barclays bank account over the period 24 September  2008 to 27 August 2009 showed that the appellant had a £24,000 bank overdraft facility and that, for most of the period, he was overdrawn (but within the limits of that facility).
12.	We noted, however, that at the time the two instalment payments were due, their payment would not have taken the appellant's debit balance over the amount of the facility either at the time it was due or within the following month.
Discussion
13.	The exculpation provided by regulation 32 does not assist the appellant. The payments were more than 14 days late.
14.	It does not appear to us that the appellant has a reasonable excuse for his failures to comply with the obligations to make the interim payments. We accept that his business was adversely affected by the economic downturn and the weather, but he had an overdraft facility which would have enabled him to make the payments, and on the evidence before us, it would have been reasonable for him to have made them.
15.	The appellant did not suggest that the exercise of their discretion by HMRC to terminate his gross payment status was unfair or oppressive. There was no indication on the facts before us that it was.
16.	We dismiss the appeal
17.	As the hearing took place in the absence of the appellant, he has a right to apply for the decision to be set aside pursuant to Rule 38 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “Rules”).   
18.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it under Rule 39. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

CHARLES HELLIER

TRIBUNAL JUDGE
RELEASE DATE: 15 October 2010