In JP Whitter (Water Well Engineers) Limited v HMRC [2018] UKSC 31, the Supreme Court (SC) agreed that HMRC did not have to consider the wider impact on the taxpayer’s business when cancelling its Construction Industry Scheme (CIS) gross payment status.

The SC upheld the earlier decisions of the Court of Appeal and Upper Tribunal deciding that HMRC’s discretion over whether to cancel a CIS gross payment status registration did not require them to consider all circumstances and impacts of the decision.

  • The taxpayer submitted that it would lose 60% of its turnover, would have to dismiss 80% of its employees and that recovery would take up to ten years.
  • The taxpayer’s contention was that, as there is no specific restriction in law as to how the discretion must be given, that it must be unfettered: it is unrestricted and has no constraints, it should consider all factors and impacts.

The SC disagreed:

  • Statutory discretion must be exercised consistently with the objects and scope of the statutory scheme.
  • It is inconsistent with a tightly drawn gross payment status scheme to have a general dispensing power.
  • Gross status registration is a privilege with significant economic advantages, but with stringent conditions and a risk of cancellation.

The appeal was dismissed.


CIS: Contractors and Subcontractors

CIS: gross payment status cancellation

External link: JP Whitter (Water Well Engineers) Limited v HMRC [2018] UKSC 31



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