A contractor who failed to make any deductions from payments to subcontractors was liable for those deductions despite evidence that the relevant subcontractors had (or would) pay tax on the amounts they accounted for to HMRC.

The appellant carried on business as a painter and decorator and undertook work installing flooring, fitting kitchens and bathrooms, and constructing outdoor decking. In the tax years 2013/14 to 2017/18, the appellant made payments to subcontractors, which fell within the construction industry scheme (CIS). However, he did not make deductions from any of those payments as required by the CIS and did not account to HM Revenue and Customs (HMRC) for any amounts that he should have deducted from the payments made to the subcontractors. 

HMRC opened an employer compliance check into the appellant’s records. He acknowledged from the outset that he was