< Go Back HMRC costs awarded against Taxpayer by First Tier Tax Tribuanal Posted: Jun 22, 2019
The First Tier Tax Tribunal (FTT) has the power to award costs against the losing party if they consider that party has behaved unreasonably and therefore contributed to the incursion, by the other party, of unnecessary costs. In
Paul Wheeler v HMRC  TC07164 the FTT did just that and awarded costs against an unrepresented taxpayer on account of his unreasonable
behaviour during proceedings. The payment of costs is to be enforced at some future point when the Appellant has sufficient funds.
In two earlier connected cases, the Appellant had a fixed £300 penalty upheld together with daily late filing penalties for failure to comply with a Schedule 36 information notice from HMRC. The penalty was then tripled (from £1,600 to £4,800) due to his failure to
attend both FTT hearings and in view of his general behaviour towards HMRC and, in some ways, his disregard for the authority of the FTT. The FTT judge
determined that he was deliberately absent from the hearings and
that his behaviour was designed to "cock a snook at HMRC and to an
extent the Tribunal".
HMRC applied to the tribunal for unnecessarily wasted costs of £4,695.15 in respect
of the earlier penalty appeals on the grounds that Mr Wheeler's conduct
was unreasonable as he had appealed a second time but not made any
reasonable effort to support his appeal.
The FTT awarded costs but due to Mr Wheelers financial position the award could not to be enforced without the express permission of the FTT,
by way of an application with supporting evidence. The FTT did not set any expiry date. This means that, at any point in the future, if HMRC have
sufficient evidence to show that Mr Wheeler has the means to pay the
costs, they can apply to the FTT for permission to enforce the
order for their costs.
The Appellant started off with penalties of £1,900 which, although still a sizeable sum, was considerably lower than the maximum allowed by law, at that stage, of £9,900. He complied with part of the information notice but
not all of it and then, after the shenanigans detailed in the cases, he ended up with a final bill of some £9,500; half of which
could be hanging over him for years to come.
An unusual case, this cautionary tale illustrates the risks that unrepresented taxpayers can unwittingly take when dealing with HMRC and especially when they
appeal to the FTT without fully understanding the legislation or processes involved and therefore not understanding the specific or inherrent risks they may face. Perhaps engaging with and providing the information to HMRC on a timely basis would have saved a lot of work, time, effort and money but certainly any objective assessment of the risks and benefits of going to a FTT hearing in the circumstances described would have flagged that prospect up as an unnatractive option.
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