Tribunal Rules Lack of Reasonable Care in Access Contracting Services Ltd Case Regarding CIS Compliance

Citation: [2023] UKFTT 973 (TC)
Judgment on


In the case of Access Contracting Services Ltd v The Commissioners for HMRC, the First-tier Tribunal (Tax Chamber) deliberated on an appeal concerning penalties imposed in relation to the Construction Industry Scheme (CIS). The underlying legal question addressed whether the appellant, Access Contracting Services Ltd (ACS), had exercised “reasonable care” as stipulated by the Income Tax (Construction Industry Scheme) Regulations 2005, specifically under Regulation 9(3) and 9(5).

Key Facts

ACS, a labour provider within the construction industry, did not make the appropriate tax deductions from payments to three subcontractor companies as required under the CIS legislation. As a result, HMRC imposed a tax liability and penalty assessment against ACS. Despite the appeal, the Tribunal was tasked with determining whether ACS had indeed exercised reasonable care in fulfilling its obligations under the scheme.

The key facts highlighted the company structure, the roles of the individuals involved (including the pivotal role played by office manager Annette Chivrall), the processes in place for managing CIS compliance, and the extent of reliance on Ms Chivrall’s expertise in handling such matters.

The case turned on the interpretation of “reasonable care” under the relevant CIS Regulations, particularly whether condition A of Regulation 9(3) was satisfied. Condition A considers whether a contractor took reasonable care to comply and that any failure to deduct tax was due to an error made in good faith or a genuine belief that the Act did not apply to the payment.

Two pieces of case law were pivotal in shaping the Tribunal’s analysis:

  1. Anderson (deceased) v HMRC [2009] TC 00206, establishing the standard for “reasonable care” as it pertains to what a reasonable taxpayer would do.
  2. Barrett v HMRC [2015] TC 04514, which reiterates that reasonableness is contingent on individual circumstances and the taxpayer’s actions in appointing an accountant.

The Tribunal considered both the conduct of ACS and its internal processes to gauge whether the care taken by ACS in complying with CIS obligations met a reasonable standard.


The Tribunal found that ACS did not exhibit reasonable care, particularly due to insufficient internal controls and checks concerning Ms Chivrall’s work, despite her expertise. The lack of verification by directors on CIS status checks led to the tribunal’s conclusion that the company’s controls were inadequate considering the potential high-risk impact of non-compliance.

Additionally, the tribunal addressed the issue of “special circumstances” that could warrant a penalty reduction, concluding that ACS had not demonstrated any such circumstances. Regarding the penalty assessment, the tribunal suggested that the maximum reduction for “telling, helping and giving” should be applied if penalties were not to be suspended.


In conclusion, the Access Contracting Services Ltd v The Commissioners for HMRC case underscores the importance of adequate internal controls, due diligence, and proactive oversight by company directors in the management of tax compliance, specifically within the CIS framework. The legal principles of “reasonable care” were illuminated by the tribunal’s rigorous examination of company practices against established standards from precedent cases. The decision reaffirmed the principle that reasonable care requires tailored risk management appropriate to the scale of potential non-compliance consequences.

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