The mistaken belief by the appellant company’s sole director that the company was not liable to make deductions from construction industry scheme (CIS) contractors and submit CIS returns was not one that could be reasonably held.  

The appellant company was incorporated in 1994. It provided “project management/quantity surveying services to industrial or commercial organisations”. The company’s only employee was its sole director (RS). The appellant occasionally employed sub-contractors. 

In December 2016, HM Revenue and Customs (HMRC) opened an enquiry into the company’s corporation tax return for the period ended 31 March 2015. During those enquiries it became apparent that the company had been paying sub-contractors to undertake work involved within the construction industry. 

The Company subsequently appealed against a decision by HMRC refusing a claim under the Income Tax (Construction