In BTN Flooring Ltd v HMRC [2018] TC06323, the First Tier Tribunal (FTT) cancelled penalties for late filed Construction Industry Scheme (CIS) returns as a combination of not having access codes and chronic stress gave the taxpayer a reasonable excuse for their failure.

Where the CIS applies, a contractor must withhold tax on payments to subcontractors and report this to HMRC monthly; from April 2016, the returns must be submitted online. Late Filing Penalties apply where the returns are not delivered on time.

  • The Company's Secretary “found it difficult to get on the system” to file CIS returns, could not get the help she needed from HMRC.
  • Access codes issued lapsed and she obtained assistance from her daughter to file the Returns.
  • She was not computer literate and was undergoing treatment throughout this period for stress and anxiety.

HMRC did not allow an appeal for reasonable excuse. It decided to interpret her responses as a request for Statutory Review, this concluded that there was no reasonable excuse

The FTT found that:

  • The Secretary had tried to obtain assistance, but met with limited success
  • Her health concerns were possibly exacerbated by the difficulties she had with the CIS
  • She had taken the steps that a reasonable person in her position would have taken
  • Thus she had a Reasonable Excuse for the late filing
  • The penalties were discharged


Construction Industry Scheme

Penalties: Late filing

Statutory Review

Grounds for appeal: Taxpayer excuse

External BTN Flooring Ltd v HMRC [2018] TC06323