ARTG8660 - First-tier and Upper Tribunals: The tribunal hearing: Tribunals right to award costs

First-tier Tribunal
Upper Tribunal
Rees practice 

First-tier Tribunal

The tribunal may award costs (in Scotland, expenses) in Complex cases, see ARTG8390, except where the customer has written to the tribunal within 28 days of the notice of the case category to say that they wanted the proceedings excluded from potential liability for costs. The tribunal may make an order on an application or on its own initiative.

The First-tier Tribunal can also award costs

  • if it thinks that either the customer or HMRC or their representative acted unreasonably in bringing, defending or conducting the proceedings, or
  • in relation to s29(4) TCEA 2007 (wasted costs).

In relevant cases, a person may apply for costs by writing to the tribunal and to the person against whom they are applying for the costs order to be made. Their application should include a schedule of costs claimed. They can apply at any time during the proceedings but no later than 28 days after the date of

  • the tribunal’s notice of decision, or
  • any notice of withdrawal which finally disposes of all issues in the proceedings.

The tribunal cannot make an order relating to costs against either the customer or HMRC

  • without taking into account their means (if an individual), and
  • giving them an opportunity to make representations.

The amount of costs to be paid can be arrived at

  1. by decision by the tribunal
  2. by agreement between the paying and receiving persons
  3. by consideration of all or part of the costs incurred by the receiving person, if not agreed.

Where there has been an assessment as set out in 3 above, either the paying or receiving person can apply to

  • the county court, the High Court or the Costs Office of the Supreme Court (in England and Wales) for a detailed assessment of costs
  • the Auditor of the Sheriff Court or Court of Session (in Scotland)
  • the Taxing Office of the High Court of Northern Ireland.

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Upper Tribunal

The Upper Tribunal can only make an award for costs

  • on appeals from a decision of the First-tier Tax Chamber, or
  • where a case has been referred by or on appeal from another tribunal in the same circumstances and to the same extent as the First-tier Tribunal above, or
  • in judicial review proceedings, see ARTG12000 onwards, or
  • in proceedings transferred from the Tax Chamber of the First-tier Tribunal, or
  • if it thinks that either the customer or HMRC or their representative acted unreasonably in bringing, defending or conducting the proceedings, or
  • in relation to s29(4) TCEA 2007 (wasted costs).

The Upper Tribunal may make an order for costs on an application from a party or on its own initiative.

A person may apply for costs by writing to the Upper Tribunal and to the person against whom they are applying for the costs order to be made. Their application should include a schedule of costs claimed. They can apply at any time during the proceedings but within 1 month of

  • the Upper Tribunal’s notice of decision, or
  • any notice of withdrawal which settles the matter.

The Upper Tribunal may not make an order for costs or expenses against a person without first giving that person an opportunity to make representations.

In addition, where

  • an appeal has been transferred from the First-tier Tax Chamber to the Upper Tribunal at first instance, or
  • the Upper Tribunal is considering a judicial review, or
  • costs are being sought on the grounds of a party’s unreasonable behaviour

the Upper Tribunal cannot make an order relating to costs against either the customer or HMRC without taking into account their means (if an individual).

The Upper Tribunal does not have to consider an individual’s means if the case before the Upper Tribunal is an appeal against the decision of the First-tier Tribunal.

The amount of costs to be paid can be arrived at

  • by decision by the Upper Tribunal
  • by agreement between the paying and receiving persons
  • by assessment of all or part of the costs incurred by the receiving person, if not agreed.

Where there has been an assessment of all or part of the costs incurred by the receiving person, if not agreed, as set out in the bullet above, either the paying or receiving person can apply to

  • the county court, the High Court or the Costs Office of the Supreme Court (in England and Wales) for a detailed assessment of costs
  • the Auditor of the Sheriff Court or Court of Session (in Scotland) for the taxation of expenses
  • the Taxing Office of the High Court of Northern Ireland.

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Rees practice

Under the terms of a Parliamentary statement, HMRC is willing in appropriate circumstances, and in particular where we are appealing against an adverse decision, to consider waiving any claim to costs in cases before the Upper Tribunal or the appeal courts, or to consider making other arrangements (this may also extend to cases before the First-tier Tribunal)

In considering the exercise of HMRC’s discretion, influential factors include the risk of financial hardship to the other party, the involvement of a point of law the clarification of which would be of significant benefit to taxpayers as a whole and the efficient collection and management of revenue for which HMRC have responsibility.

If HMRC are to come to an arrangement of this nature, we would expect to do so in advance the hearing and following an approach by the taxpayer involved.

If it is suggested that this practise should be applied in any particular case, the matter should be referred to Central Policy (Tax Administration Advice) for advice.