This case concerned an application for costs made by the appellant in accordance with the FTT rules (Patel v HMRC  UKFTT 128 (TC)). Mr Patel argued that costs had been incurred mainly because of HMRC’s unreasonable conduct in failing to agree Mr Patel’s hardship application, and HMRC’s misconceived strike-out application, which was refused by the Tribunal. HMRC argued that no costs should be awarded prior to the case being allocated to the complex track, and that no costs should be awarded before the hardship application was determined. HMRC also rejected the accusation of unreasonable conduct.
The tribunal determined that it:
- had discretion to award costs, including those incurred prior to the allocation to the complex track; and
- was not prevented from making an award in respect of costs incurred prior to the determination of hardship.
The FTT found that “the parties could both have addressed the hardship issue in ways that made more efficient use of their own, and the Tribunal’s, resources”. It found that the schedule of costs provided was deficient and non-compliant. It determined that “the appropriate course of action is to determine the principle that Mr Patel is entitled to costs, but that he is required to produce a compliant schedule of costs, so that the Tribunal can make a summary assessment if the parties are unable to reach agreement”. The costs to be claimed should “relate to all reasonable costs incurred in and incidental to this appeal without limitation as to time”.
The FTT added:
“I have found that although the Tribunal may not entertain an appeal pending the resolution of “hardship”, that does not mean that the appeal was not started when the notice of appeal was filed. I find that the costs relating to the application for hardship were incurred in this appeal, and that they should therefore fall within the scope of the costs order.”
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In Tax Appeals – Law and Practice at the FTT, tax barrister Keith Gordon analyses some 500 precedents to show how the FTT rules are applied in practice, and how taxpayers may use the tribunal system for appealing against tax decisions.