Strongwork Construction Limited v Her Majesty's Revenue & Customs
Decision date: 3 November 2009
Neutral citation: [2009] UKFTT 292 (TC)
Overall AI summary confidence: high
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: high
Strongwork Construction Ltd appealed HMRC's decision to withdraw its gross payment status under the Construction Industry Scheme after a compliance check found ten late PAYE payments in the relevant 12-month period. The Tribunal held the defaults exceeded the tolerances in Regulation 32 and, absent a reasonable excuse, meant the company failed the compliance test; the company's explanations (bad debts and the director's injury) did not establish a sufficient reasonable excuse to avoid removal. The Tribunal upheld HMRC's decision and noted it had no discretion to apply a proportionality test to overturn removal of 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: high
The operative ratio is that Regulation 32 sets specific tolerances for PAYE payment defaults and exceeding those tolerances causes failure of the compliance test unless the taxpayer can show a reasonable excuse under the relevant provision (paragraph 12(3)); mere business impact or proportionality arguments are not a ground to overturn removal, and the Tribunal may review HMRC's exercise of power under s67 but cannot substitute a proportionality assessment for the statutory compliance test.
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 decision records obiter commentary that proportionality is not a permissible ground to overturn removal of gross status, referencing authority on that point, and notes as a practical point that a taxpayer may seek to reapply for gross status after demonstrating subsequent compliance.
Warning
Chunk contains extensive repeated passages and duplicated text. notes contain repeated passages and duplicated text; they may be noisy and not necessarily exhaustive.