Scofield v Revenue & Customs [2011] UKFTT 199 (TC) (24 March 2011)

Scofield v Revenue & Customs [2011] UKFTT 199 (TC) (24 March 2011)

Section 66(1) Finance Act 2004 confers a discretionary power on HMRC to cancel gross payment status, not a mandatory obligation. The statutory context, including the careful distinction between 'may' and 'must' throughout the relevant provisions, supports this interpretation. HMRC failed to exercise this discretion in the appellant's case, treating cancellation as automatic upon a compliance failure. The Tribunal has jurisdiction to review whether HMRC exercised its discretion and to allow the appeal if it did not.

Citation
[2011] UKFTT 199 (TC)
Parties
Appellant: John Scofield; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 March 2011
Procedural Posture
Tax Appeal / First Tier Tribunal (tax), Substantive Decision After Adjourned Hearing
Outcome
Appeal allowed
Legal Topics
Construction Industry Scheme, Gross Payment Status, Statutory Interpretation, Discretion of HMRC, Compliance Test, Appeals Process
Tax Law Administrative Law Construction Industry Scheme Gross Payment Status Statutory Interpretation Discretion of HMRC Compliance Test Appeals Process

Case Brief

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Parties

John Scofield

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax), Substantive Decision After Adjourned Hearing

Legal Issues

  1. 1 Whether HMRC has discretion to withdraw gross payment status under section 66(1) Finance Act 2004
  2. 2 Whether HMRC exercised any such discretion
  3. 3 Jurisdiction of the Tribunal to review HMRC's decision

Ratio Decidendi

Section 66(1) Finance Act 2004 confers a discretionary power on HMRC to cancel gross payment status, not a mandatory obligation. The statutory context, including the careful distinction between 'may' and 'must' throughout the relevant provisions, supports this interpretation. HMRC failed to exercise this discretion in the appellant's case, treating cancellation as automatic upon a compliance failure. The Tribunal has jurisdiction to review whether HMRC exercised its discretion and to allow the appeal if it did not.

Court Disposition

Appeal allowed

Orders

  • HMRC's cancellation of the appellant's gross payment status is set aside.
  • HMRC is directed to reconsider the appellant's gross payment status, exercising its discretion in accordance with the law.