S Hughes v HMRC

In S Hughes v HMRC (TC00839 – 10 December) HMRC began an enquiry into the tax returns submitted by a contractor (H) and formed the opinion that he had understated his profits. It agreed a settlement covering income tax and Class 4 national insurance contributions. The officer conducting the enquiry observed that H had failed to deduct tax from certain payments to subcontractors and told H that this would be dealt with separately. Subsequently HMRC issued determinations under Income Tax (Construction Industry Scheme) Regulations SI 2005/2045 reg 13 and imposed penalties under TMA 1970 s 98A. H appealed against the determinations and penalties contending that these liabilities should have been included in the negotiated settlement which had previously been agreed. The First-Tier Tribunal rejected this contention and dismissed H’s appeal noting that the wording of the negotiated settlement made it clear that...