In the case of Kwok v HMRC [2026] UKFTT 624 (TC), the FTT has awarded costs to the Appellant for HMRC’s late withdrawal from the appeal against an HMRC decision to deny input VAT recovery.
The FTT noted that the issues for determination were:
“(1) Should an order be made for HMRC to pay the Appellant’s costs of and incidental to the appeal?
(2) Should such an order be made on the standard or indemnity basis?
(3) Should the order be for detailed assessment of the Appellant’s costs, or should I proceed to summary assessment (and if so, in what amount)?”
The FTT concluded that the decision by HMRC to withdraw did amount to unreasonable conduct under Rule 10(1) of the First-tier Tribunal (Tax Chamber) Rules 2009, so costs were appropriate, but “of itself, the fact that HMRC persisted in defending this appeal until the last moment is not sufficient to meet the higher threshold for indemnity costs …, and the same applies to the complaint at 3.6. I therefore conclude that costs should be assessed on the standard basis.”
The FTT also decided that summary assessment would not be appropriate, citing the size of the claim, the fact that HMRC had substantial grounds for disputing the proportionality and extent of those costs and that a significant proportion of the costs pre-dated the commencement of the appeal itself, concluding that “I decline the Appellant’s invitation to undertake a summary assessment of his costs and order detailed assessment if the costs cannot be agreed.”
https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/624
Related content from Claritax Books
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.
