Tribunal Rules HMRC Acted Unreasonably, Orders Payment of Costs to Essex Trading Limited

Citation: [2024] UKFTT 69 (TC)
Judgment on


The case law extracted presents the decision of the FIRST-TIER TRIBUNAL in the matter of Essex Trading Limited (ETL) versus The Commissioners for His Majesty’s Revenue and Customs (HMRC). The Tribunal considered whether HMRC acted unreasonably in opposing the appellant’s application for specific disclosure and determined the subsequent application for costs under Rule 10 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.

Key Facts

The facts pertinent to the legal analysis of this case revolve around a specific disclosure application made by ETL alleging HMRC seized their goods without evidence of duty payment. ETL contended that all goods in question, including excess stock not listed in stock sheets from Hi Line Wines Limited (Hi Line), were purchased from Hi Line, and seizure was void due to Hi Line’s insolvency proceedings.

HMRC opposed this application for disclosure on the basis of confidentiality under section 19 of the Commissioners for Revenue and Customs Act 2005 (CRCA) and relevance, as the documents sought involved another taxpayer’s tax affairs.

ETL’s subsequent application for costs claimed HMRC’s opposition was unreasonable, inviting the Tribunal to apply the guidelines from earlier case law such as Distinctive Care Ltd v HMRC and Market & Opinion Research International Limited v HMRC (MORI) to assess unreasonable conduct.

The case applies key legal principles concerning the Tribunal’s powers to order costs and the definition of unreasonable conduct for Rule 10 applications. Rule 10 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 outlines strict criteria for when the Tribunal may order costs against a party, focusing primarily on whether a party or their representative acted unreasonably.

The pivotal legal principles applied in this case include:

  1. The “Unreasonable Conduct” Standard: Drawing from Distinctive Care Ltd v HMRC and MORI, the Tribunal examined whether HMRC’s conduct could be deemed unreasonable based on an assortment of criteria: the breadth of reasonable conduct, the significance of handling the case, and the threshold of persisting in arguing contrary to an “unbeatable argument.”

  2. Confidentiality Under s19 CRCA: By referencing the case law Good Law Project v HMRC and Mitchell v HMRC, the Tribunal concluded that HMRC could voluntarily disclose for the purposes of civil litigation without necessitating a Tribunal order, thus rendering the confidentiality argument weak.

  3. Relevance of Disclosure: The Tribunal indicated that HMRC’s approach to the relevancy of the requested documents was misleading, as correspondence with Hi Line’s liquidators was indeed pertinent to establishing ownership at the time of seizure.

  4. Summary Assessment of Costs: Costs were awarded based on a holistic view of the circumstances, taking into account the factors of proportionality and reasonableness of incurring such costs.


The Tribunal determined that HMRC had acted unreasonably by opposing ETL’s disclosure application, particularly on grounds of confidentiality and relevance of evidence. Consequently, the Tribunal awarded costs to ETL, ordering HMRC to pay £3,461.50 as a summary assessment. The judgment emphasized HMRC’s ability to disclose information without permission in civil litigation and criticized HMRC’s reliance on the confidentiality argument.


The Tribunal’s ruling in Essex Trading Limited v The Commissioners for HMRC underscores the nuanced application of legal principles regarding costs and unreasonable conduct within the Tax Chamber. It stresses the importance of assessing the reasonableness in context and highlights the implications of treating confidentiality provisions in CRCA. The judgment demonstrably shows the necessity of aligning legal arguments with prevailing caselaw to reduce the risks of being deemed unreasonable, bearing costs implications under Rule 10.

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