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Minnow sues HMRC for CIS card bungle
03:00 19 Oct 2005
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A 2m turnover civils contractor is engaged in a David and Goliath court battle with HM Revenue & Customs (HMRC) in an attempt to recover 500,000 after a 100-day delay in issuing a CIS 6 card.
Cumbria-based Neil Martin Ltd is due to take HMRC to court early next year over the "poor handling" and "bungling" by what was then the Inland Revenue (IR), which resulted in the delayed issue of the firm's CIS 6 card.
It is the first time in 12 years that such a case has been held against the IR.
Neil Martin applied for a CIS 6 card in June 1999 and was told by the IR it would take three to four days to arrive. In fact it took 100 days for the company to receive a card after the IR bungled its application by dismissing valid accounts for a turnover test, losing applications forms and finally sending the card to the wrong address.
"During this time it was hell," managing director Neil Martin told CJ. "The company's overdraft had risen to 120,000 and we lost contracts because we didn't have a card. Clients were using the absence of the card not to pay us. Our credit suppliers reduced our accounts from 80,000 per month to below 2,500 per month and then we were paying top rates for materials because of our financial state. This is just a case of total incompetence."
Stung by the losses, the company contacted the Parliamentary Ombudsman, which found in favour of the contractor and revealed that the IR issued "misleading information".
The IR finally agreed to pay compensation costs. These have yet to be paid.
"Having the Ombudsman find in our favour will give us extra weight for the pending trial," Martin added.
The lack of cashflow caused by the delays played its part in Neil Martin folding in 2001 and being replaced by Martin Group (sole trader) in 2001. The new group also suffered again at the hands of the IR after it sent a CIS card with Martin's face blacked out. It took another five months for a replacement to be sent out, which meant the group wasn't paid by its clients.
When Martin also set up Martin Group North West, the firm was made to wait 64 days for a new CIS 6 card after the IR lost two application forms; the forms finally arriving at the wrong branch in Carlisle.
The delay in issuing the cards, and the lack of payment, has also resulted in Martin owing 320,000 to the IR in National Insurance and PAYE contributions.
Martin claimed the IR is attempting to stop his legal challenge by pursuing the money he owes during a hearing on 9 November: "They know if they win the hearing, I will have difficulty in financing the trial."
The HMRC said it does not comment on individual cases.
However, in its defence papers, obtained by CJ, the department argued that it didn't have a duty of care to the
company "to act in reasonable expedition".
Cumbria-based Neil Martin Ltd is due to take HMRC to court early next year over the "poor handling" and "bungling" by what was then the Inland Revenue (IR), which resulted in the delayed issue of the firm's CIS 6 card.
It is the first time in 12 years that such a case has been held against the IR.
Neil Martin applied for a CIS 6 card in June 1999 and was told by the IR it would take three to four days to arrive. In fact it took 100 days for the company to receive a card after the IR bungled its application by dismissing valid accounts for a turnover test, losing applications forms and finally sending the card to the wrong address.
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"During this time it was hell," managing director Neil Martin told CJ. "The company's overdraft had risen to 120,000 and we lost contracts because we didn't have a card. Clients were using the absence of the card not to pay us. Our credit suppliers reduced our accounts from 80,000 per month to below 2,500 per month and then we were paying top rates for materials because of our financial state. This is just a case of total incompetence."
Stung by the losses, the company contacted the Parliamentary Ombudsman, which found in favour of the contractor and revealed that the IR issued "misleading information".
The IR finally agreed to pay compensation costs. These have yet to be paid.
"Having the Ombudsman find in our favour will give us extra weight for the pending trial," Martin added.
The lack of cashflow caused by the delays played its part in Neil Martin folding in 2001 and being replaced by Martin Group (sole trader) in 2001. The new group also suffered again at the hands of the IR after it sent a CIS card with Martin's face blacked out. It took another five months for a replacement to be sent out, which meant the group wasn't paid by its clients.
When Martin also set up Martin Group North West, the firm was made to wait 64 days for a new CIS 6 card after the IR lost two application forms; the forms finally arriving at the wrong branch in Carlisle.
The delay in issuing the cards, and the lack of payment, has also resulted in Martin owing 320,000 to the IR in National Insurance and PAYE contributions.
Martin claimed the IR is attempting to stop his legal challenge by pursuing the money he owes during a hearing on 9 November: "They know if they win the hearing, I will have difficulty in financing the trial."
The HMRC said it does not comment on individual cases.
However, in its defence papers, obtained by CJ, the department argued that it didn't have a duty of care to the
company "to act in reasonable expedition".
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