Tanna v Revenue and Customs (PROCEDURE : Other) [2017] UKFTT 739 (TC)

FTT-Tax
Tanna v Revenue and Customs (PROCEDURE : Other)
[2017] UKFTT 739 (TC) · 2017-10-04
[10]In a case, such as the present, which has been categorised as a “standard” category appeal, a party may only be awarded costs under Rule 1 0(1)(b) of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 (the “Procedure Rules”): … if the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending or conducting the proceedings;… 11. It is clear from the decision of

Judge Bishopp in Catanã v HMRC [2012] UKUT 172 (TCC) at [7]:

“… the tribunal may only make an order in respect of costs “of and incidental to” the proceedings. There is no power to make an order in respect of anything else, and particularly, in the context of this case, in respect of the investigation into Mr Catanã’s tax affairs which preceded the proceedings.”
He agreed, at [8], with the following observation of Judge Berner at [11] in Bulkliner Intermodal Ltd v HMRC [2010] UKFTT 395 (TC) that: “…one thing that has not changed is that the Tribunal’s jurisdiction continues to be limited to considering actions of a party in the course of “the proceedings”, that is to say proceedings before the Tribunal whilst it has jurisdiction over the appeal. It is not possible under the 2009 Rules, any more than it was under the Special Commissioners’ regulations, for a party to rely upon the unreasonable behaviour of the other party prior to the commencement of the appeal, at some earlier stage in the history of the tax affairs of the taxpayer, nor, even if unreasonable behaviour were established for a period over which the Tribunal does have jurisdiction, can costs incurred before that period be ordered. In these respects the principles in Gamble v Rowe , and Carvill v Frost [2005] STC (SCD) 208 remain good law. That is not to say that behaviour of a party prior to the commencement of proceedings can be entirely disregarded. Such behaviour, or actions, might well inform actions taken during proceedings, as it did in Scott and another (trading as Farthings Steak House) v McDonald [1996] STC (SCD) 381, where bad faith in the making of an assessment was relevant to consideration of behaviour in the continued defence of an appeal.” 12. I sympathise with Mr Tanna, who has incurred costs because of HMRC’s unreasonable and erroneous insistence that, in the circumstances of the case and contrary to s 109 of the Law of Property Act 1925, an SDLT return and tax were due regarding the sale of the Property as being by the Receiver as principal rather than as agent of the mortgagors. However, as this conduct occurred prior to the commencement of the appeal and before the Tribunal had jurisdiction it cannot provide the basis for an order for costs. It therefore follows that, having regard to all the circumstances, the application for an order for costs cannot succeed and I have no choice but to dismiss the application. 13. However, I must add that it is most regrettable that HMRC did not adopt the commendable and reasonable approach taken, particularly by the Appeals Caseworker at their Solicitor’s Office, once they had been notified of the appeal and when it had come within the Tribunal’s jurisdiction immediately on becoming aware of the circumstances of the transfer of the Property. 14. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JOHN BROOKS TRIBUNAL JUDGE RELEASE DATE: 05 OCTOBER 2017