This was an appeal from a decision that the commissioners for Her Majesty’s Revenue and Customs (HMRC) could not be liable for breach of statutory duty or for breach of a common law duty of care in failing to process an application for a subcontractor’s tax certificate within a reasonable time.

There were numerous delays in the processing of Neil Martin Ltd’s (Martin Ltd) application for a CIS6 certificate. These delays included posting the certificate to an incorrect address, treating signed CIS3 and CIS8 forms as applications for a registration card (CIS4) and errors in processing the application for a CIS6 certificate.

It was not disputed that HMRC had made some administrative errors in the processing of Martin Ltd’s application for the CIS6 certificate and that, as Martin Ltd received the CIS6 certificate later than it should have done, it is likely to have caused some loss. Martin sought redress for this loss and issued court proceedings to recover its loss.

The following issues were decided by the court:

1. Did HMRC’s failure to act in accordance with Section 561 (2) of the Income and Corporation Taxes Act 1988 (ICTA) give rise to a private law cause of action sounding in damages?

2. Did HMRC owe a direct common law duty of care to Martin to process its application for a certificate under section 561(2) with reasonable expedition? If so, did the acts of HMRC constitute a breach of that duty?

3. Was HMRC vicariously liable for the negligent acts of its employees committed in processing Martin Ltd’s CIS6 application?