Tax Tribunal Costs and Proceedings

When tax tribunals proceed in the upper tribunal,  tax tribunal costs generally follow the event and the unsuccessful party will normally pay the costs of the successful party.  Tax tribunals can often incur a large amount of costs, sometimes running to in excess of hundreds of £000s, particularly when allegations by HMRC revolve around £millions in purported tax frauds.  Challenging HMRC’s position with the Tribunal can be extremely complex and expensive, even for those with significant financial resources.

Recent high-profile cases, such as Rupert Grint’s recent tax battle with HMRC, highlight how individuals, even those of a high-profile nature, can be caught in the middle of tax disputes, leading to costly consequences. 

Experienced cost draftsmen and cost lawyers can help clients to work through and quantify their tribunal costs more effectively, whether your case involves the tax chamber, council tax disputes, or general taxation issues. At ARC Costs, we specialise in managing, preparing, and negotiating legal costs to ensure you get expert cost representation aswell as maximise the recovery of your legal costs.

From assessing the potential costs of a dispute to recovering expenses after a successful tax appeal, our team helps you minimise financial risks and focus on achieving the best outcome.

If you have been unsuccessful in a Tribunal tax appeal, and are facing a significant legal costs bill from HMRC, our team can assist in reducing the other side’s legal costs, and reduce your ongoing exposure to legal costs expenditure.

Rupert Grint to Pay £1.8m after Losing Tax Battle [BBC News]

In a recent, high-profile case involving Rupert Grint in the First Tier Tax Tribunal, the actor who played Ron Weasley in the Harry Potter franchise, was ordered to pay £1.8 million in tax after losing his legal battle with HM Revenue and Customs (HMRC).  However, this amount only represents the amount to be paid to HMRC in unpaid tax, and makes no reference to any additional costs to be paid.

The dispute came about from Grint’s tax return from 2011-2012, in which he received a £4.5 million payment from the company that managed his business dealings. Grint claimed this payment was a capital asset, which would be subject to capital gains tax at 10%.

However, HMRC disputed this and said that the payment should have been classed as income and subject to the higher income tax bracket at 52%. Grint appealed against this decision by HMRC, but the first-tier tribunal upheld the original ruling, Judge Harriet Morgan stating that the money “derived substantially the whole of its value from the activities of Mr Grint” and was therefore taxable as income.

How a Costs Lawyer can Help with Tax Tribunal Costs

Dealing with first-tier tribunal tax costs and upper tribunal costs can be as important/and costly as the initial dispute itself. Tribunals can often seem straight forward, but can quickly change as new details and complexities arise during the course of the case.

In the case of Rupert Grint v HMRC [2024] UKFTT 956 (TC), as a First Tier Tribunal dispute the parties are not automatically entitled to costs, and the judgment makes no reference to the same at this time.  However, the Tribunal Rules under Section 10 stipulate that costs can be awarded at the Tribunal’s discretion, or if the matter has been allocated as a “Complex Case”.  It is likely given the circumstances, that the dispute between HMRC and Mr Grint will be considered a Complex Case, and therefore that a costs award will be made.

The criteria for Complex Cases are set out under Section 23(4) of the Tribunal Rules as follows:

(4) The Tribunal may allocate a case as a Complex case under paragraph (1) or (3) only if the Tribunal considers that the case—

(a)will require lengthy or complex evidence or a lengthy hearing;

(b)involves a complex or important principle or issue; or

(c)involves a large financial sum.

Details of costs in the subject case are not known at this time, but an application for costs will usually follow the judgment having been handed down, which in the subject case was on 25 November 2024.  At the time of writing, the opportunity for Mr Grint to appeal to the Upper Tribunal remained in place, and details of any further costs consequences are likely due to come to light in due course.

Given the likely sizeable sum of costs to be claimed, the matter will unlikely be unsuitable for summary assessment, and the detailed assessment procedure as set out in CPR 47 will likely need to be followed.

Why choose ARC Costs to Assist with Tax Tribunal Costs?

Our team of cost experts at ARC Costs ensure that every aspect of your legal costs is managed, and as independent costs experts we can provide advice and clarity on what can and cannot be claimed for, irrespective of whether you are the Receiving or Paying Party.

If you are the Receiving Party, ARC Costs can assist in the quantification, negotiation and recovery of your tax tribunal costs. If your dispute with HMRC in the Tribunal has been unsuccessful, we can assist you as a Paying Party in respect of HMRC’s tribunal costs and seek to challenge their costs claim through Points of Dispute and our negotiation services.

To find out more about the services that we offer please use the free chat facility to speak with one of our experts. Alternatively, we are available via email at info@arccosts.co.uk, or can be contacted by phone on 01204 397302. 

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