Keith Joseph-Lester t/a Scaffold Access Services v Commissioners for Her Majesty's Revenue and Customs
Decision date: 11 February 2011
Neutral citation: [2011] UKFTT 114 (TC)
Overall AI summary confidence: medium
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: medium
This appeal challenges HMRC's withdrawal of the appellant's gross payment status under the Construction Industry Scheme after multiple late PAYE payments during a sudden 2009 downturn in his scaffolding business. The Tribunal found the regulatory disregards did not apply but concluded the downturn was unforeseeable and the appellant had taken reasonable steps (overdraft/credit card use, staff reductions, pressing debtors, renegotiating creditors), so insufficiency of funds amounted to a reasonable excuse. The appeal was allowed and the withdrawal was not upheld; the Tribunal did not decide proportionality or whether HMRC has discretion to withdraw gross status.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
A sudden, severe and unforeseeable business downturn can constitute a reasonable excuse for PAYE payment defaults where a reasonably competent businessman, exercising foresight and due diligence, could not have avoided the insufficiency of funds; evidence of active mitigation steps (maximising available borrowing within constraints, using credit cards, reducing drawings and staff, pressing debtors and renegotiating creditors) supports that conclusion.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal expressly declined to decide on the proportionality of withdrawal or on whether HMRC has a discretion to withdraw gross payment status in the absence of full argument. It also noted HMRC guidance that lists categories of non-overlookable compliance failures, but did not treat that guidance as determinative.