Brijesh Patel v The Commissioners for HMRC
[2023] UKFTT 128 (TC)
Gigabiz Ltd & Ors v The Commissioners for HMRC
15 August 2023
[2023] UKFTT 693 (TC)
First-tier Tribunal
The taxpayers won their case against the taxman. The taxman has to pay their legal fees, but not extra fees for bad behaviour. A judge will decide exactly how much the taxman has to pay.
Key Facts
- •Gigabiz Ltd, Xiao Wang, and Xuhua Ji appealed HMRC decisions.
- •Appellants sought costs from HMRC under Rule 10 of the Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009.
- •The case was allocated as complex, and appellants did not opt out of cost liability.
- •HMRC effectively conceded the appeal on the last day of the hearing.
- •Appellants claimed £134,835 plus VAT or £153,672.50 (excluding VAT) in costs.
Legal Principles
Tribunal may order costs if a party acted unreasonably or if the case was complex and the taxpayer didn't opt out of cost liability.
Tribunal Procedure (First-Tier Tribunal) (Tax Chamber) Rules 2009, Rule 10
General rule is that the unsuccessful party pays the costs of the successful party.
Civil Procedure Rules (CPR) 44.2(2)
Indemnity costs are reserved for cases where the court disapproves of a party's conduct of litigation.
CPR 44.3, Reid Minty v Gordon Taylor [2001] EWCA Civ 1723
Factors to consider for indemnity costs include deliberate misconduct or unreasonable conduct to a serious degree; bringing a speculative, weak, or opportunistic case; constantly changing case; pursuing a case excessively without regard to merits.
Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696 (Ch)
Court must consider the conduct of both parties when deciding on indemnity costs; conduct of applicant may have contributed to conduct complained about.
Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS [2009] EWHC 1696 (Ch)
Outcomes
Respondents (HMRC) to pay Appellants' costs on the standard basis.
Appellants were successful in their appeal, and there was little argument against the incidence of costs from HMRC. HMRC's late concession, while unusual, wasn't considered unreasonable to a serious degree.
Indemnity costs not awarded.
Appellants' criticisms of HMRC's conduct, while potentially valid criticisms of the merits or conduct of their case, did not meet the threshold for indemnity costs. The late concession, though unusual, was deemed preferable to protracted, arguably disingenuous argumentation.
Costs to be assessed on a detailed basis, not summary assessment.
The complexity of the cost claim and the inadequate nature of the submitted schedule of costs rendered a summary assessment inappropriate. A detailed assessment allows for proper scrutiny.