Construction industry – HMRC duty of care
HM Revenue & Customs (HMRC) has no general duty of care to issue CIS certificates to businesses in the construction industry with reasonable expedition, according to the Appeal Court. However, a business can sue HMRC for negligence in some circumstances.
A small civil engineering contractor applied for CIS certificates but there was a delay in issuing them. Without a certificate, the company could not be paid and went bankrupt. The court considered that there was nothing in the CIS legislation that required HMRC to deal with applications quickly and that various administrative errors by HMRC staff did not give the applicant a right to compensation.
However, in this case an unidentified HMRC employee had completed part of the application form without the authority of the contractor and had done so incorrectly. This went beyond being an administrative mistake. In assuming the authority to make the application, the employee also had a duty of care to the contractor and compensation was therefore due.
The case underlines that taxpayers cannot necessarily expect HMRC to deal with their affairs correctly, so it is important to engage good professional agents if you cannot look after a matter yourself. It is also worth remembering that HMRC does voluntarily pay some compensation where its persistent errors have given rise to financial loss.