Small contractors dodged hundreds of thousands of pounds in tax

Dozens of construction firms and other contractors have been named on the government’s latest list of firms that deliberately defaulted on tax.

According to the official list, several small contractors defaulted on hundreds of thousands of pounds each, with one owing almost £2m.

Every few months, HMRC publishes information on those that have been charged for deliberate defaults on tax of more than £25,000.

The list includes those that have “deliberately got their tax affairs wrong”, either by making errors in their tax returns or failing to comply with their tax obligations.

The most recent list names about 40 firms or individuals that appear to have worked in construction or related industries (such as plastering, roofing and scaffolding) at the time of their default.

The second-largest default on the latest list was from Donton Ltd, a Nottingham-based domestic construction firm that owed £1.9m in tax between 2018 and 2021. It was fined £1.3m as a result of the shortfall.

Donton’s most recent accounts, covering the year to November 2020, report a turnover of £3.8m and pre-tax profit of £14,666, with one employee. It received a winding-up order in June this year following a bankruptcy petition from HMRC.

Another construction firm that defaulted on a large amount of tax was Kkrol Ltd, based in Burnley. HMRC said the company was fined £327,463 for unpaid tax of £467,804, relating to periods in 2019, 2020 and 2021.

The company’s accounts for 2020 state that it was dormant that year, while for 2019 it reported net assets of £495 and zero employees. The firm, which records say is a domestic construction business, was incorporated in December 2018.

In November 2022 it received a notice for compulsory strike-off, but this was suspended the next month after an objection was received.

Walsall-based Gurmail Construction Ltd was also fined more than £300,000 for unpaid tax in 2020 amounting to £446,286.

Gurmail was incorporated in 2019 and decided to wind up voluntarily in 2021. The liquidator’s most recent progress report, from July this year, says that initial investigations revealed “a number of unexplained transactions as well as an unknown account that required further scrutiny and explanations from the director”.

It adds that “these matters are ongoing” and promises to update creditors in a future report.

Another large default came from Nordic Ltd, which is described as having carried out building-completion work such as painting and decorating. The firm defaulted on £428,048 of tax in 2019 and 2020, and was fined almost £300,000 as a result.

Nordic, which has been based in London, Nottingham and Gravesend, was incorporated in 2016 as AA Painters and Decorators Ltd and dissolved in July this year.

Meanwhile, Woodside Contracts Ltd, a floor- and wall-covering company based in Walsall, was fined £752,265 for defaulting on tax of £1.1m between 2019 and 2021. The company received a notice for compulsory strike-off in April last year. This was suspended in May, with no further updates provided since then.

HMRC said it only publishes details of defaulters “where the taxpayer has not made a full and immediate disclosure when HMRC started to investigate or prior to any investigation”.

The tax service notes that the published companies may have since changed their behaviour, or may no longer be at the published address.

HMRC added that the business currently at the published addresses may have no connection with published businesses.

In addition, it pointed out that the businesses currently at the published addresses ”could be under completely new management”, despite having the same name.

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