In the case of Athena Luxe Ltd v HMRC [2026] UKFTT 775 (TC), the company, following its successful appeal against HMRC’s decision not to allow input VAT recovery on a number of purchased items (see the Claritax News story), has been awarded costs of and incidental to the appeal, summarily assessed on the standard basis, in the sum of £9,500. The company had claimed £11,500 on the indemnity basis with HMRC arguing for £6,000 on the standard basis.
PROCEDURE – Application for costs by Appellant – Summary assessment – Whether on standard or indemnity basis – Quantum of costs – Application allowed in part
The application had been made late as “the Appellant, a litigant in person, did not appreciate that there was a time limit for the Application and, having paid for representation at the hearing, had extremely limited funds and could not afford legal advice until after the expiry of the time limit. However, on receiving advice the Application was made without delay.” Noting that the delay “almost double the time permitted under the FTT Rules, must be regarded as both serious and significant”, the FTT nevertheless judged that “given the financial constraints described in the Application and that HMRC do not appear to object to the Application being admitted out of time, I have, in the circumstances somewhat reluctantly, concluded that the Application should be admitted despite its lateness.”
Considering the costs, the FTT concluded that:
“Given HMRC accept that they should pay Athena’s costs of and incidental to the appeal, and thereby implicitly accepting that the threshold condition has been met, the issue arises as to whether the costs should be assessed on the standard or indemnity basis.
As in Kwok, the issue of indemnity costs was not raised in the Application but in reply to HMRC’s response to the Application and, like Judge Donmall in that case, I consider that there would be potential procedural unfairness were I to make a finding on indemnity costs in Athena’s favour as HMRC, despite referring to standard costs in their response, could not have known that this was a point that they might need to respond to.
In addition, I am not satisfied that the conduct of the litigation by HMRC was, despite the reliance on the argument in Fount Construction, unreasonable to such a high degree and/or “out of the norm” for the indemnity basis to apply.
Given the sums involved, I consider it appropriate to make a summary assessment …
… Having carefully considered the materials before me, and not taking the amount of VAT at stake into account, I have summarily assessed Athena’s costs on the standard basis, at £9,500″
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/775
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