Upper Tribunal Denies Protective Costs Order in Inheritance Tax Planning Appeal

Citation: [2024] UKUT 70 (TCC)
Judgment on


In the Upper Tribunal (Tax and Chancery Chamber) case concerning the Executors of the Estate of Peter John Linington & Anor v The Commissioners for His Majesty’s Revenue and Customs (HMRC), the Tribunal was faced with an application for a protective costs order (PCO) in relation to an ongoing appeal. This article delves into the key topics addressed within the case, closely evaluating the legal principles that were judiciously applied by Judge Jonathan Cannan.

Key Facts

The appeal in question addresses the effectiveness of inheritance tax (IHT) planning arrangements enacted by the late Peter John Linington. The First-tier Tribunal (FTT) had previously held that the arrangements, which involved the transfer of interest to a discretionary trust, did not succeed in excluding assets from Linington’s estate for IHT purposes. The respondents, HMRC, had issued determinations to this effect, which the appellants contested.

The executors and the trustees, referred to as the Appellants, petitioned for a PCO to shield themselves from potential costs they may incur should the appeal be unsuccessful. HMRC, on the other hand, resisted the application, suggesting it is unwarranted.

The legal discourse in this case centered around the PCO, its principles, and application. Derived from judicial review and immigration cases, the PCO seeks to provide litigants with a measure of cost security, permitting them to proceed with cases of public importance without the risk of prohibitive financial consequences if they lose.

The principles for the grant of a PCO, as cited in the case Drummond v HM Revenue & Customs [2016] UKUT 221 (TCC) and further refined in Corner House Research v Secretary of State for Trade & Industry [2005] EWCA Civ 192, include:

  1. Issue of general public importance
  2. Public interest in resolving the issue
  3. Absence of private interest in the outcome
  4. Fairness and justice considering parties’ financial resources
  5. Probability of discontinuing the proceedings without the order

In contrast, the provisions related to costs capping orders (CCOs) and appeal cost orders (ACOs) under the Civil Procedure Rules (CPR 3.19 and 52.19 respectively) were deemed inappropriate for the indicators presented in the case at hand.


The Tribunal denied the application for a PCO, positing several decisive factors:

  • The Tribunal found no issue of general public importance or public interest that necessitated the resolution through a protected appeal. The arrangements in question were time-bound, ceasing to be effective after the enactment of the Finance Act 2012.
  • There was a substantial private interest evidenced by the appellants where the estate beneficiaries stood to gain or lose a significant sum based on the appeal’s outcome.
  • Despite acknowledgment of the appellant’s modest personal means, there were concerns regarding unexplored financial avenues that could potentially cater to the costs, including other executors and trusts related to the estate.
  • The risk of costs, estimated by HMRC at around £20,000 plus VAT, was not considered disproportionately high in the wider financial context of the estate, valued initially around £1 million.
  • No separate consideration was given to an ACO since the principles overlapped significantly with those governing a PCO.


In evaluating the application for a PCO, the Tribunal employed established legal principles and carefully balanced the interests of justice, public interest, and the appellants’ private interests. The decision to deny the PCO reflects careful scrutiny of the appellants’ situation against a backdrop of established legal criteria. The case underscores that while PCOs can provide access to justice, they are not issued lightly and are reserved for cases with broader public significance absent substantial private interests.