Brants Bridge Limited & Anor v The Commissioners for HMRC

Facts

Brants Bridge Limited and Braccans Limited were property companies within a wider group headed by Property 4 Investments Ltd, of which Mr Kohn was the sole active director and the person responsible for decisions on tax compliance. Each company redeveloped Bracknell office buildings into residential apartments, in projects of substantial value. They made payments to subcontractors without deducting tax under the Construction Industry Scheme. HMRC's case was that Brants Bridge failed to deduct and account for £549,949.34 and Braccans for £312,926.60. HMRC refused to make directions relieving the companies of liability under regulation 9(5) of the Income Tax (Construction Industry Scheme) Regulations 2005, save for a small number of payments, and gave its refusal decisions on 12 April 2023. Mr Kohn's evidence was that he relied on an in-house team, recruited from his community without formal qualifications, which advised that the scheme did not apply to investment companies and that the companies were deemed contractors below the threshold. The companies appealed to the First-tier Tribunal (Tax Chamber). They abandoned their ground that no deductions were due, and it was common ground that the Tribunal's jurisdiction was limited to Condition A. HMRC accepted good faith and genuine belief, so the sole issue was reasonable care.