Devon & Cornwall Surfacing Limited v Commissioners for Her Majesty's Revenue and Customs

Decision date: 5 May 2010

Neutral citation: Neutral citation not available

Overall AI summary confidence: medium

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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

Devon & Cornwall Surfacing Ltd appealed loss of gross payment status after late CIS returns and late PAYE/NIC/subcontractor payments. The Tribunal found the company had reasonably and justifiably relied on its company secretary, that this reliance caused the defaults, and that the company had remedied matters and could be expected to comply going forward. On that basis the company had a "reasonable excuse" and satisfied the CIS compliance test, so the appeal was allowed.

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

Where a taxpayer reasonably relies on a third party (here, a company secretary) to handle its tax affairs, that reliance can amount to a "reasonable excuse" for defaults in the direct tax/CIS context if the reliance was reasonable and caused the failure; and where the taxpayer promptly remedies defaults and HMRC accepts it can be expected to comply in future, the statutory CIS "compliance test" may be satisfied despite past defaults.

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 noted that statutory provisions in the VAT context that bar reliance on a third party as a reasonable excuse are a contextual distinction and do not automatically preclude reliance in direct tax/CIS cases. It also mentioned factors relevant to assessing reasonableness (e.g. the third party's prior engagement by the company's accountants and subsequent remedial steps).

Warning

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