Fencing – crossing swords with HMRC

I represented a fencing contractor who had originally started in business selling and erecting fences for the farming community. After some years he started to do some domestic fencing as well, without realizing that domestic fencing fell within the “construction Industry” legislation meaning that tax should have been deducted from his self-employed workforce.

He had a visit from HMRC’s Employer Compliance team and this point was raised. Assessments for over £100,000 in tax were raised and in addition penalties were being considered. I argued that my client had a “reasonable excuse” for his error, that he did not, nor could be expected to know the finer details of tax law and that, as was permitted by HMRC’s own rules, he could be let off the tax and penalties as an “innocent error” had occurred. HMRC did not accept this argument so I appealed the decision. The decision was reviewed and HMRC stuck to their guns.

I then discovered that the client had been subject to an earlier Compliance visit by HMRC and the very subject of domestic fencing had been mentioned at interview. The HMRC officers did not challenge or correct the treatment of domestic fencing and missed the opportunity to educate the client. I argued successfully that HMRC had failed in their duty of care to the client and the tax bill was cancelled. Needless to say the client is now operating the scheme properly.

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