Reasonable Excuses
Posted by admin on 26 May 2011 | 0 Comments
A new tribunal case has revealed reasonable excuses for not paying your PAYE/NIC/CIS over to HM Revenue & Customs. We'll skip "the dog ate my tax return" and other not so reasonable excuses we've heard (and given) and get down to business.
Alan Kincaid's company, AK Construction Limited, appealed against HMRC trying to remove his gross payment status for not paying over CIS tax on time. Gross payment status allows people working under the CIS to be paid the full amount they invoice and not have any tax stopped at source. The advantage to HMRC of the CIS means that rouge builders will have tax paid over and will not evade tax. The disadvantage to everyone else is you only receive four fifths of the labour that you invoice. Hence why gross payment status is so desirable.
Some of the payments AK Construction made to HMRC were late which meant they failed the compliance test, despite that he was unable to pay because of cash flow difficulties. Judge John Walters ruled in favour of AK Construction saying that "the appellant had done all that he could to avoid this problem" and that was a reasonable excuse. Though HM Revenue & Customs still disagree with cash flow being a reasonable excuse, it depends on the tribunal judge you find yourself before.