Beech Developments Limited appealed to the High Court against a liability determination worth £1.8m issued by HMRC related to its failure to deduct income tax and National Insurance contributions from payments made to a sub-contractor.

The claimants, including Beech Developments, were six companies who were members of the same corporate group. Each of them made contract payments through the construction industry scheme to the same subcontractor, Beech Construction Partnership Ltd - BCPL.

Businesses using CIS are required to deduct tax from a subcontractor’s payments. The deductions count as advanced payments towards the subcontractor’s tax and NICs.

In 2017/18, all six companies made contract payments to BCPL, but did not deduct the deductible amounts, and thus made no payments to HMRC. The total amount of tax at stake was £2.4m.