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HMRC internal manual

Construction Industry Scheme Reform Manual

Appeals against refusal or cancellation of Gross Payment Status - Appeals against a First Tier or Upper Tribunal decision

CISR48600 Action guide contents
   

 

Where there is the possibility of an appeal against a decision of either the First Tier or Upper Tribunal (whether by HMRC or the subcontractor) you may need to take further action on CISR whilst this is awaited depending on the payment status of the applicant. For example:

Subcontractor held net payment status at the time the application is made

  • Where a subcontractor makes an application for gross payment status and the application is refused by HMRC because of compliance failures, where the applicant appeals against that decision and the tribunal decides to uphold that appeal in the subcontractor’s favour, if HMRC is then given permission to appeal against the tribunal decision, even though further action is being taken with regard to the appeal, you must give gross payment status to the subcontractor as soon as possible after the first tier tribunal’s original decision, the Action Guide at CISR48710 describes how to do this.
  • Where a subcontractor submits an appeal against refusal to grant gross payment status and the tribunal finds in favour of HMRC and dismisses the subcontractor’s appeal, if the subcontractor is given permission to appeal against the first tier tribunal decision the subcontractor will remain on net payment status.

Subcontractor held gross payment status at the time the Tax Treatment Qualification Test (TTQT) was carried out

HMRC decides to appeal against the tribunal decision

If the subcontractor submits an appeal against the loss of gross payment status and the tribunal finds in favour of the subcontractor, then gross Tax Treatment would be retained by the subcontractor pending the outcome of any appeal against the tribunal decision by HMRC.

Where you are authorised to ask for permission to appeal against an Upper Tribunal decision, and following a court hearing the judge finds in favour of HMRC, if you are already beyond 90 days since the original refusal of gross payment status, a further 30 days from the date of the judgement should be allowed before notifying the relevant contractors that net payment status is to be applied to the subcontractor. This is to allow time for any further appeal against that decision to be made by the subcontractor.

The subcontractor decides to appeal against the tribunal decision

If the subcontractor submits an appeal against the loss of gross payment status and the tribunal finds in favour of HMRC and dismisses the subcontractor’s appeal, then gross Tax Treatment would be re-instated for the subcontractor at the time the appeal was logged, and would be retained if the subcontractor is given permission to appeal against the first tier tribunal decision.

  • In most cases the subcontractor will accept the decision but if they believe that the tribunal have erred in law they can ask for permission to appeal to the Upper Tier. Where a subcontractor asks for a full written decision so that they can consider whether an appeal is appropriate, gross payment should not be removed until the time limits for asking for permission to appeal to the Upper Tribunal have expired.

Written reasons for the tribunal decision

You should note that the tribunal has up to 28 days after the date of the tribunal hearing to supply full written reasons for the decision it has made to both the appellant and HMRC (if it has not already done so). Once a full written decision has been provided to each party, they will then both have 56 days in which to apply for permission to appeal against that decision (these cases are expected to be few in number).

Where you are unsure whether a full written decision has been provided by the tribunal to each party, you should seek advice from the CIS Advisory Team following a tribunal decision in favour of HMRC.

You should therefore wait for 56 days after the date the full written reasons for the decision made by the tribunal have been provided to both parties before you take any action to remove gross payment status from the subcontractor where the tribunal has found in favour of HMRC, by changing the status of the appeal on CIS (as set out in CISR48700) to ‘upheld in favour of HMRC’.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) CISR97030(This content has been withheld because of exemptions in the Freedom of Information Act 2000)