H & H Contract Scaffolding Ltd v The Commissioners for HMRC
Decision date: 16 February 2024
Neutral citation: [2024] UKFTT 151 (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
H & H submitted an amended CT600 claiming R&D tax credit via an agent, Legal Rooms; HMRC disallowed the claim, assessed a careless inaccuracy penalty under Schedule 24 FA 2007 and refused to suspend it. The First-tier Tribunal held HMRC had not shown the inaccuracy was due to carelessness and, on the balance of probabilities, the appellant had taken reasonable care in engaging and checking its agent, so the penalty assessment was cancelled. The Tribunal did not decide the separate suspension (SMART) issue.
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 Tribunal's decision indicates that, for Schedule 24 FA 2007 careless inaccuracy penalties, HMRC must explain why the asserted facts establish that the taxpayer (or relevant third party) failed to take reasonable care; an inaccuracy alone does not prove carelessness, and a taxpayer who reasonably engages and checks a specialist agent can meet the reasonable care standard.
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 observed that HMRC should make clear when they rely on para.18 so the taxpayer can address any asserted shift in the evidential burden, and that it was unnecessary to rehearse R&D scheme details to determine the penalty appeal.