Gigabiz Ltd & Ors v The Commissioners for HMRC
[2023] UKFTT 693 (TC)
Metropolitan International Schools Limited v The Commissioners for HMRC
10 April 2024
[2024] UKFTT 320 (TC)
First-tier Tribunal
A company (MIS) challenged HMRC's information requests, leading to costs for a witness summons. A judge initially sided with MIS, but after review, ruled that HMRC did not act wrongly. The initial costs award was overturned because HMRC had no obligation to explain their reasons to the company beforehand.
Key Facts
- •HMRC served a witness statement from Ms Powell (non-lawyer) on 18 February 2020.
- •Hearing date set for 19 October 2021.
- •On 17 September 2021, MIS requested Grant Thornton's Mr. Pedley attend to refute parts of Ms Powell's statement.
- •Grant Thornton indicated Mr. Pedley wouldn't attend without a witness summons.
- •MIS sought to exclude or challenge certain paragraphs of Ms Powell's statement, relating to conversations with Mr. Pedley.
- •HMRC refused to amend the witness statement.
- •MIS lodged a witness summons application on 11 October 2021.
- •The Tribunal issued the witness summons.
- •At the hearing, the Tribunal did not exclude the disputed paragraphs.
- •The Tribunal initially awarded costs to MIS but later set aside that decision pending further representation.
Legal Principles
Tribunal's discretion to award costs under section 29 of the Tribunals Courts and Enforcement Act 2007.
Tribunals Courts and Enforcement Act 2007, section 29
Wasted costs orders can only be made under Rule 10(1)(a) (wasted costs due to improper, unreasonable, or negligent acts) or Rule 10(1)(b) (unreasonable conduct in bringing, defending, or conducting proceedings).
Tribunal Procedure Rules, Rule 10(1)(a) and (b)
The meaning of "acted unreasonably" under Rule 10(1)(b) is a value judgment based on the specific facts; it's a lower threshold than "wholly unreasonably".
Market & Opinion Research International Ltd v Revenue and Customs Commissioners [2015] UKUT 0012 (TCC) and Distinctive Care Ltd v HMRC cases.
Wasted costs orders cannot be made against a case officer who isn't a legal representative, as confirmed in Ridehalgh v Horsfield and Paul Owen v KA Shun Lo.
Ridehalgh v Horsfield [1994] Ch 205 and Paul Owen v KA Shun Lo 2022 UKFTT 121 (TC)
Outcomes
Appeal allowed. The initial costs award was set aside.
The Tribunal erred in law by implying HMRC had a duty to explain to MIS why information was requested. No wasted costs could be awarded under Rule 10(1)(a) as there was no unreasonable act or omission by HMRC. No award could be made under Rule 10(1)(b) as failure to explain the reasons for the information requests was not unreasonable conduct.
No further costs order made.
The Tribunal found no unreasonable conduct by either party to justify a costs award. However, the Tribunal noted outstanding compliance issues and directed HMRC to provide outstanding documents by 1 May 2024.