In Alpine Contract Services v HMRC [2016] TC05148 a director's actions led to penalties for deliberate behaviour. The FTT's interpretation of the term 'potential lost revenue' created a windfall for HMRC.

  • A construction company filed nil returns under the CIS scheme.
  • Its director had admitted to HMRC that he was too busy to file correct CIS returns on time.
  • There was not in general an overall loss of tax to HMRC as the company was entitled to offset tax it paid as a subcontractor from its CIS liability.
  • HMRC raised penalties under Schedule 24 FA 2007 for deliberate not concealed errors, based on the corrected return figures and not on the tax payable figures. 
  • The penalty was not suspendable as the 'error' was deliberate.
  • The taxpayer appealed the penalties.

The FTT agreed that the error was deliberate. Despite the lack of a loss of tax it decided that the term 'potential lost revenue' in paragraph 5 Schedule 24 FA 2007 should be interpreted narrowly in the context of the actual tax return and not in terms of HMRC's actual loss of tax.

'There were clearly periods when the Company owed money to HMRC. A dictionary definition of the word ‘potential’ is ‘a possibility’. When an inaccurate return was filed it would have been impossible for Mr Robbie to have known at that time whether the next return would show a liability or a credit. There was a possibility that the Company would have owed money to HMRC.'


An interesting interpretation, as paragraph 5 defines potential lost revenue as being an amount 'due or a result of correcting the inaccuracy or assessment.' Perhaps also a contravention of ECHR in terms of the fact that some might well consider that it is disproportionate to levy a tax geared penalty when there is no loss of tax to HMRC. Happily this case sets no precedents in terms of the law so you may choose to argue differently. Apparently there were also case management issues so there may be scope for an appeal.


Alpine Contract Services v HMRC [2016] UKFTT TC05148