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June 6, 2014
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Costs Awarded Against Taxpayer for Pulling Out of Tribunal Hearing

HMRC challenged for “costs” in the First Tier Tribunal case of R P BAKER (OXFORD) LIMITED TC03549

Background

The taxpayer had entered into a trust arrangement, which HMRC wished to scrutinise and they issued a notice to provide a list of information under FA 2008 Sch 36.

Only part of that information was provided by the taxpayer within the requisite time frame and therefore HMRC issued a £300 penalty.  The taxpayer appealed this penalty and their appeal was due in the First Tier Tribunal, but two days before the hearing the taxpayer withdrew.

Therefore HMRC applied for costs under Rule 10(1)(b) Tribunal Procedure Rules 2009, which permits the Tribunal to make an award against a party: “if the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending, or conducting the proceedings”

Outcome

The Judge held that costs were due to HMRC for the following reasons:-

-          No grounds were made to support an argument that the documents not provided were not reasonably required by HMRC

-          The taxpayer did have “power” over the documents requested because they were provided at some point

-          The firm advising had no Legal Privilege over the documents because they were not solicitors and the Notice had been raised after the outcome of the Prudential Case

-          The taxpayer conducted their appeal unreasonably, by pulling out at the last moment

HMRC’s claim was 5.7 hours at £146 per hour.

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