HMRC found that they had deducted tax at the wrong rate in some occasions and had never deducted tax on payments made to subcontractors for travelling. They calculated the tax bill emanating from these errors to be £70,000 plus penalties.
We reviewed the situation and felt that the Contractor had taken reasonable care in dealing with their CIS responsibilities as they had employed an experienced individual to handle it for them. These mistakes had been made by this individual.
Whilst the case could have been taken to Tribunal on the basis that no liabilities were due, the client expressed a wish to settle matters quickly and so we negotiated with HMRC for a payment of £25,000 to be made – a saving of over £45,000 from the original assessment.