Norman Bruce t/a Norrie Bruce Plant Hire v Commissioners for Her Majesty's Revenue and Customs

Facts

Norman Bruce, trading as Norrie Bruce Plant Hire, appealed against HMRC's decision to cancel his registration for gross payment under the Construction Industry Scheme, made under sections 66 and 67 of the Finance Act 2004. The scheme, introduced from 6 April 2007, allows a subcontractor to receive payments from a contractor without deduction, subject to an annual "scheduled review" of the subcontractor's tax compliance. A scheduled review covering the period 16 June 2009 to 16 June 2010 found that NB's self-assessment balancing payment for 2008/2009, due on 31 January 2010, was not paid until 2 April 2010, 61 days late. HMRC notified NB on 21 June 2010 that his status would change to payment under deduction. NB initially told HMRC he had been unable to pay because his own contractors had paid him late, but subsequently corrected this, admitting his account had in fact been in credit and that he had followed his accountant's advice in giving that explanation. Correspondence continued through late 2010 and into 2011, with NB also contending that reassignment to deduction would harm his business. HMRC maintained that the payment fell outside the prescribed exceptions to the compliance test and that no reasonable excuse had been shown. NB appealed to the First-tier Tribunal, the appeal being accepted despite being late.