A company that relied on a trusted employee did not take reasonable care to avoid compliance failures, and its appeal against HMRC’s refusal to make a direction relieving the company of liability for CIS deductions was dismissed. 

The appellant company (ACS) provided tradespeople through contractor companies. ACS was run by an individual (MB), who dealt with back-office matters, and employed an office manager (AC) to assist MB with the company’s general compliance obligations, including completing ACS’s construction industry scheme (CIS) returns. MB’s sons were project managers for ACS. In 2008, MB retired from the business and handed over the compliance and administrative duties of the business to AC.  

In 2014/15, ACS agreed to commence work with three companies (ST, UP and UCS). AC contacted HM Revenue and Customs (HMRC) to obtain the CIS status of those companies. ST and UP were not registered for CIS, and UCS