Tribunal Orders Costs Against Alpha Republic for Unreasonable Conduct in Legal Proceedings

Citation: [2024] UKFTT 68 (TC)
Judgment on


In the recent First-tier Tribunal (Tax Chamber) case of Alpha Republic Limited v The Commissioners for His Majesty’s Revenue and Customs (HMRC), Tribunal Judge Aleksander deliberated over whether Alpha Republic Limited (the appellant) acted unreasonably in the conduct of proceedings, which ultimately led to an application by HMRC for a cost order against Alpha Republic pursuant to Rule 10 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. This decision serves as an illustration of the application of Tribunal procedural rules on costs, the standards of reasonableness in conduct for legal representatives, and the precise approach to cost assessment in Tribunal proceedings.

Key Facts

The case revolves around an application by Alpha Republic to strike out HMRC’s statement of case, which was previously refused. This led to a subsequent application by HMRC for costs against Alpha Republic under Rule 10(1)(b), claiming the appellant acted unreasonably in bringing or conducting proceedings. The costs claimed totaled £13,023.90, comprising base profit costs and counsels’ fees. The Tribunal Judge examined whether the case warranted such an order based on the behavior of the parties, adherence to procedural rules, and whether the steps taken in proceedings were reasonable or not.

Rule 10 and Costs

The Tribunal invoked Rule 10 of the 2009 Rules, which permits cost orders where a party or their representative has acted unreasonably in bringing, defending, or conducting proceedings. It is a discretionary power that the Tribunal can exercise to ensure fairness and just resolution of disputes.

Unreasonable Conduct

Fundamental to the application of Rule 10 is the concept of unreasonable conduct. The Tribunal referred to Distinctive Care Ltd v HMRC [2018] UKUT 155 (TCC) and the subsequent Court of Appeal decision for guidance on what constitutes unreasonable behavior. The principles highlighted include the acknowledgment that unreasonableness does not require a threshold of “wholly unreasonably”, inactions can also be considered as unreasonable conduct, and that reasonable conduct may encompass a range of actions. Moreover, the failure to rigorously review the subject matter when proceedings are commenced, persisting in an argument in the face of an unbeatable argument to the contrary, and failing to handle the case appropriately are indicative of unreasonable conduct. Importantly, actions should be assessed on the facts and circumstances at the time they occurred without the advantage of hindsight.

Summary Assessment of Costs

In considering HMRC’s costs, Judge Aleksander conducted a summary assessment. Reasonableness, proportionality and whether costs were reasonably incurred formed the basis of this assessment. The appellant’s failure to provide counter-submissions on the claimed amounts was also taken into account.


The Tribunal upheld HMRC’s application for costs, finding Alpha Republic acted unreasonably in several respects. The judge dismissed Alpha Republic’s application as it did not serve a substantive purpose, was disproportionate, and failed to fulfill Tribunal directions, notably in not approaching HMRC before bringing the application and in flouting Judge Sinfield’s directions for a schedule of defects. Further, the last-minute withdrawal of the application to bar HMRC was termed ‘unreasonable’. The cost was summarily assessed at £12,873.90 after a reduction of £150 due to unsubstantiated costs for leading counsel.


The Alpha Republic Limited v The Commissioners for HMRC case is instructive for legal practitioners on the criteria and application of cost orders within the Tribunal framework. It clarifies that unreasonable conduct, as determined by objective standards, can include failure to resolve issues without Tribunal intervention, inappropriate applications, and non-compliance with procedural directions. Importantly, it underlines that parties should act in ways that further the overriding objective of fair and just treatment, and avoid the unnecessary use of Tribunal resources. Legal professionals are reminded that even in the context of procedural matters, a reasoned, proportionate approach is imperative, and deviating from this can result in tangible financial penalties.

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