FTT accepted Harbron’s appeal

The Guilds in-house tax specialists and husband and wife team, Richard and Julia Clutterbuck are extremely proud of the result of in the case of Harbron Recruit Ltd v HMRC [2025] UKFTT 23 (TC) where they worked with James Harbron, the director of Harbron Recruit Ltd.

Their work allowed the FTT to accept the appeal against determinations for outstanding CIS deductions that should have been made from payments to Umbrella Companies employing construction workers that were considered to fall foul of the intermediary’s legislation, requiring PAYE to be operated.

The FTT accepted that, although the company had made a mistake in believing that no CIS deductions were due and that payments to the umbrella company’s need not be included on a CIS return, it had acted with reasonable care and therefore Condition A should apply to remove the liability.

The error dated back to the introduction of the agency rules in April 2014. Mr Harbron, the managing director of Harbron Recruit Ltd (HRL), had sought advice from Richard and Julia as to the interaction of the new rules with the CIS but had mistakenly come to the conclusion that, as the agency workers were classed as the umbrella employees and subject to PAYE, there was no requirement to make CIS deductions on payments to the umbrella. HMRC argued that this mistake was as a result of a failure to take reasonable care, but the FTT did not agree:

The FTT stated “I have no hesitation in agreeing with Mr Harbron and Mr Clutterbuck that HRL, acting through Mr Harbron, acted with the level of care which the reasonable person in his position would have showed. That is for the following reasons:

(1) The interaction of the two sets of provisions was technically complex.

(2) Mr Harbron recognised that this was the case, and realised he was out of his depth. 

(3) He acted reasonably when he instructed Richard and Julia, a subsidiary of a highly reputable large firm and a specialist in CIS and employment taxes. 

(4) He also acted reasonably in relying on Mr Clutterbuck, a former HMRC Senior Manager with over thirty years’ experience in CIS and employment law who was familiar with the law and guidance on CIS and the agency rules. 

(5) HRL asked for and received professional advice about both CIS and the agency rules.

(6) Mr Harbron also ensured that the staff within HRL were professionally qualified and had the requisite skills, and it was reasonable to rely on them as well as on Richard and Jukia.

This case is a clear example of a situation where, despite Mr Harbron doing his best to ensure that the correct steps were taken, a mistake was nevertheless made. However, a mistake does not prevent Condition A being met. As HMRC themselves say in their Compliance Manuals.

With a clearly demonstrated and unmatched level of compliance knowledge here at The Guild why don’t you take the opportunity to discuss your CIS and agency legislation compliance requirements with Richard or Julia.

Don’t wait for HMRC to enquire, seek impartial advice now. We have experts here at The Guild who can help. Contact us now.