HMRC Tribunal Costs: Tax Disputes 


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HMRC Tribunals and Costs of HMRC Disputes


When a dispute arises between a party and HMRC due to a decision made by the latter, the First Tier Tribunal may handle the appeal.

The legal costs recoverability rules for a HMRC dispute differ from those that you would normally expect from Court or tribunal proceedings. Moreover, the rules regarding costs recovery for the First Tier Tax Tribunal differ from those for the Upper Tax Tribunal. The same rules apply to costs when an individual is liable for HMRC’s incurred costs.


First Tier Tax Tribunal Costs

The costs rules and procedure for the First Tier Tax Tribunal can be found in the First Tier Tribunal (Tax Chambers) rules. Within this document, Section 10 highlights the rules relating to costs orders. Essentially, Section 10 states that a costs order may be produced in a HMRC dispute if the order is for wasted costs. Alternatively, an order can be made if the tribunal decides that a party to the proceedings or their representative has acted unreasonably in bringing, defending or conducting the proceedings, or the matter has been allocated as complex.

The general rule for costs for the First Tier Tax Tribunal is that parties pay their own costs. Therefore in matters where a party has defended their case unsuccessfully, they will not be held liable to pay for HMRC’s costs incurred. Alternatively, if HMRC are the losing party, they will not be liable for the opposing party’s costs. However, this changes at the Upper Tax Tribunal.

When the matter arrives at the First Tier Tax Tribunal, the Tribunal will allocate the matter to a track. This allocation will depend on the complexity of the case.

Within a HMRC dispute allocated to the complex track, a party can decide that liability will be excluded from the proceedings. However, this has to be applied for in writing, within 28 days of allocation to the complex track. If this is done, parties will not be able to recover their costs from the unsuccessful party. In addition, on the complex track, parties are able to seek costs orders. The rules for the application of costs orders will usually mirror those for the Upper Tribunal.


Upper Tax Tribunal Costs


If an appeal has been refused by the First Tier Tax Tribunal, the matter can go to the Upper Tribunal.

At this tribunal, if a party is unsuccessful, they will pay the successful party’s costs. This contrasts the general rule for costs at the First Tier Tax Tribunal, apart from on the complex track.

The Tribunal have full discretion when awarding costs. Therefore, they can decide the amount of costs which can be recovered. Alongside paying the incurred costs, the tribunal can decide whether the losing party are required to pay interest on the costs.

Furthermore, a payment on account may be ordered by the tribunal. Usually, this will be decided at the conclusion of the case, in line with CPR 44-47. If Detailed Assessment is going to occur, it will be completed at the SCCO.

Thus, it can be concluded that if you are unsuccessful at the Upper Tribunal, you will have to pay HMRC’s costs. If no prior agreement has been made, the costs may include legal fees and disbursements. If you are successful at the Upper Tribunal, it is likely that HMRC will be responsible for payment of your HMRC tribunal costs.


HMRC Tribunal Costs Recovery


If you have been awarded costs at a First Tier Tax tribunal or an Upper Tax Tribunal, it is likely that you will be required to go through the process of detailed assessment. In order for the receiving party to recover their costs, they will be required to serve a Bill of Costs alongside a Notice of Commencement upon the paying party, thus commencing the process of detailed assessment.

The paying party must serve their Points of Dispute on the receiving party if there are elements in the bill of costs which they do not agree to. If these are not served within 21 days, the receiving party is entitled to apply for a default costs certificate at this point which will allow them to recover all costs listed within the bill.

Parties should attempt to negotiate their HMRC Tribunal costs using this process. If an agreement cannot be reached, a Detailed Assessment Hearing may be required to settle the dispute.


How can ARC Costs assist with HMRC Tribunal Costs?


As a team of experienced costs law experts, we can assist in many types of costs disputes, including HMRC tribunal costs.

If you require advice regarding costs orders, we can utilize our extensive knowledge to guide you. Furthermore, if a court has ordered Detailed Assessment for your case, we can prepare the necessary documents such as the Bill of Costs or Points of Dispute. If the matter reaches a hearing, we can provide assistance and advocate in Court if necessary.

Please contact us via 01204 397302 to find out more about how we can help.

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