Stephen Ray v The Commissioners for HMRC
[2024] UKFTT 141 (TC)
Vikrant Bhargava v The Commissioners for HMRC
3 January 2024
[2024] UKFTT 66 (TC)
First-tier Tribunal
Mr. Bhargava's request to get his legal fees back after winning a tax case was late and badly done. The judge said his application was too late, lacked key details, and didn't follow the rules, so he won't get his money back.
Key Facts
- •Mr. Bhargava appealed an HMRC decision resulting in a £3,217,219 tax liability.
- •HMRC withdrew its opposition to the appeal.
- •Mr. Bhargava's costs application was over a month late.
- •The application lacked detail, lacked justification for costs exceeding standard rates, and did not demonstrate that costs were 'of and incidental to the proceedings' or meet the indemnity principle.
- •The total costs claimed were £52,220.
Legal Principles
Three-stage test for relief from sanctions (late costs application): (1) assess the seriousness of the delay; (2) determine the reason for the delay; (3) balance the merits of the reason against the prejudice caused.
Martland v HMRC [2018] UKUT 0178 (TCC)
Tribunal's jurisdiction to award costs is governed by the Tribunals, Courts and Enforcement Act 2007 (TCEA) and Tribunal Rules.
Tribunals, Courts and Enforcement Act 2007 (TCEA); Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009
Costs must be 'of and incidental to' the proceedings (TCEA s 29).
TCEA s 29
Costs applications must be made within 28 days of the final decision (Tribunal Rule 10).
Tribunal Rule 10
In considering late applications, the need for efficient litigation and compliance with rules should be given particular weight.
Denton v TH White Limited [2014] EWCA Civ 906; BPP v HMRC [2017] UKSC 55; Martland v HMRC [2018] UKUT 0178 (TCC)
A litigant's reliance on an experienced advisor's failure to comply with procedural rules generally does not provide a good reason for the failure.
Katib v HMRC [2019] UKUT 189 (TCC); Hytec Information Systems v Coventry City Council [1997] 1 WLR 666
Costs are awarded as an indemnity only; a party cannot recover more costs than they are liable to pay.
Commissioner of Police of the Metropolis v Malik [2023] EWHC 3213 (Admin)
Outcomes
Permission to make the late costs application was refused.
The delay was serious and significant, there was no good reason for the delay, and the merits of the application were extremely weak due to insufficient detail, unjustified high costs, and failure to demonstrate that costs were 'of and incidental to the proceedings' or met the indemnity principle.