“What we will be checking We will be checking your identity and your tax records for the year ending5 April 2022 . What you need to do now You must send us good quality copies (in colour if possible) of the following: • the recent bank or building society statement which shows the account number you stated in your tax return • your recent bank or building society statement which shows your full details, for example, your name and address – if you do not have a bank or building society account, please tell us in writing …”
“Your record has been selected for an enquiry review … To do this we have sent you the information notice request to see all bank statements”
“It is hoped that this will resolve the issue in dispute and the appellant will reconsider their position…it is hoped that this letter will provide the Appellant with the remedy that they seek.”
“2. —Overriding objective and parties’ obligations to co-operate with the Tribunal (1) The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly. (2) Dealing with a case fairly and justly includes— (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues. (3) The Tribunal must seek to give effect to the overriding objective when it— (a) exercises any power under these Rules; or (b) interprets any rule or practice direction. (4) Parties must— (a) help the Tribunal to further the overriding objective; and (b) co-operate with the Tribunal generally.” (a) dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties; (b) avoiding unnecessary formality and seeking flexibility in the proceedings; (c) ensuring, so far as practicable, that the parties are able to participate fully in the proceedings; (d) using any special expertise of the Tribunal effectively; and (e) avoiding delay, so far as compatible with proper consideration of the issues. (a) exercises any power under these Rules; or (b) interprets any rule or practice direction. (a) help the Tribunal to further the overriding objective; and (b) co-operate with the Tribunal generally.”
“How is conduct to be assessed? 44. In Market & Opinion Research International Limited v HMRC[2015] UKUT 0012 (TCC) (“MORI”) at [22] and [23], the Upper Tribunal endorsed the approach set out by the FTT in that case to the question of whether a party had acted unreasonably. That approach could be summarised as follows: (1) the threshold implied by the words “acted unreasonably” is lower than the threshold of acting “wholly unreasonably” which had previously applied in relation to proceedings before the Special Commissioners; (2) it is possible for a single piece of conduct to amount to acting unreasonably; (3) actions include omissions; (4) a failure to undertake a rigorous review of the subject matter of the appeal when proceedings are commenced can amount to unreasonable conduct; (5) there is no single way of acting reasonably, there may well be a range of reasonable conduct; (6) the focus should be on the standard of handling the case (which we understand to refer to the proceedings before the FTT rather than to the wider dispute between the parties) rather than the quality of the original decision; (7) the fact that an argument fails before the FTT does not necessarily mean that the party running that argument was acting unreasonably in doing so; to reach that threshold, the party must generally persist in an argument in the face of an unbeatable argument to the contrary; and (8) the power to award costs under Rule 10 should not become a ‘backdoor method of costs shifting’.” 45. We would wish to add one small gloss to the above summary, namely that (as suggested by the FTT in Invicta Foods Limited v HMRC[2014] UKFTT 456 (TC) at [13]), questions of reasonableness should be assessed by reference to the facts and circumstances at the time or times of the acts (or omissions) in question, and not with the benefit of hindsight.” (1) the threshold implied by the words “acted unreasonably” is lower than the threshold of acting “wholly unreasonably” which had previously applied in relation to proceedings before the Special Commissioners; (2) it is possible for a single piece of conduct to amount to acting unreasonably; (3) actions include omissions; (4) a failure to undertake a rigorous review of the subject matter of the appeal when proceedings are commenced can amount to unreasonable conduct; (5) there is no single way of acting reasonably, there may well be a range of reasonable conduct; (6) the focus should be on the standard of handling the case (which we understand to refer to the proceedings before the FTT rather than to the wider dispute between the parties) rather than the quality of the original decision; (7) the fact that an argument fails before the FTT does not necessarily mean that the party running that argument was acting unreasonably in doing so; to reach that threshold, the party must generally persist in an argument in the face of an unbeatable argument to the contrary; and (8) the power to award costs under Rule 10 should not become a ‘backdoor method of costs shifting’.”
“46. In assessing whether a party has acted unreasonably, this Tribunal in MORI went on to say this (at [49]): ‘It would not, we think, be helpful for us to attempt to provide a compendious test of reasonableness for this purpose. The application of an objective test of that nature is familiar to tribunals, particularly in the Tax Chamber. It involves a value judgment which will depend upon the particular facts and circumstances of each case. It requires the tribunal to consider what a reasonable person in the position of the party concerned would reasonably have done, or not done. That is an imprecise standard, but it is the standard set by the statutory framework under which the tribunal operates. It would not be right for this Tribunal to seek to apply any more precise test or to attempt to provide a judicial gloss on the plain words of the FTT rules.’” ‘It would not, we think, be helpful for us to attempt to provide a compendious test of reasonableness for this purpose. The application of an objective test of that nature is familiar to tribunals, particularly in the Tax Chamber. It involves a value judgment which will depend upon the particular facts and circumstances of each case. It requires the tribunal to consider what a reasonable person in the position of the party concerned would reasonably have done, or not done. That is an imprecise standard, but it is the standard set by the statutory framework under which the tribunal operates. It would not be right for this Tribunal to seek to apply any more precise test or to attempt to provide a judicial gloss on the plain words of the FTT rules.’”
“20. Even if the tribunal is satisfied that a party has acted unreasonably in the terms of rule 10, the tribunal nevertheless has a discretion whether or not to make a costs order, or as regards the extent of a costs order. Such a discretion, like any other discretion conferred on the tribunal, must be exercised judicially.”
“39. Ms McCafferty submitted that her client’s liability for the costs was limited, as a matter of the construction of rule 14, by a requirement that the costs in issue were ‘attributable to’ specific instances of unreasonable conduct by him. She argued that the tribunal had misconstrued the rule and wrongly ordered payment of all the costs, irrespective of whether they were ‘attributable to’ the unreasonable conduct in question or not. The costs awarded should be caused by, or at least be proportionate to, the particular conduct which has been identified as unreasonable. 40. In my judgement, rule 14(1) does not impose any such causal requirement in the exercise of the discretion. The principle of relevance means that the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct as factors relevant to the exercise of the discretion, but that is not the same as requiring BNP Paribas to prove that specific unreasonable conduct by Mr McPherson caused particular costs to be incurred…. 41. In a related submission Ms McCafferty argued that the discretion could not be properly exercised to punish Mr McPherson for unreasonable conduct. That is undoubtedly correct, if it means that the indemnity principle must apply to the award of costs. It is not, however, punitive and impermissible for a tribunal to order costs without confining them to the costs attributable to the unreasonable conduct. As I have explained, the unreasonable conduct is a precondition of the existence of the power to order costs and it is also a relevant factor to be taken in to account in deciding whether to make an order for costs and the form of the order.”
“Whenever any person has been, or is, or shall be appointed to be solicitor or attorney on behalf of his Majesty, under the orders and directions of the commissioners of the Treasury, customs, excise, or stamps, or under the orders and directions of any commissioners or other persons or person having the management of any other branch of his Majesty’s revenue, for the time being, it is and shall and may be lawful for such person to act and practice as such solicitor or attorney under such orders and directions in all and every court and courts, jurisdiction and jurisdictions, place and places, in any and every part of the United Kingdom; anything in any Act of Parliament, or in any order or rule of any court of justice, or any law, usage, or customs, in force in any part of the United Kingdom, relating to solicitors or attornies, or to the admission or practice of such solicitors or attornies, to the contrary in anywise notwithstanding.”
“29. As was summarised by the Court of Appeal in the later case of Berne Insurance Company v Jardine Reinsurance[1998] EWCA Civ 220 , in Eastwood it was held that … where a party was represented by a salaried solicitor [it is appropriate] to treat it as though it were the bill of an independent solicitor, assessing the reasonable and fair amount of a discretionary item having regard to all the circumstances of the case and to the principle that the taxed costs should not be more than an indemnity to the party against the expense he had incurred in the litigation. There might be special cases where costs awarded on the conventional basis would exceed the principle of indemnity, but it would be wrong and impracticable in cases of a salaried solicitor to require a break down of the expenses of a department in order to insure that the principle was not infringed. … 30. While non-legally qualified persons do not have rights of audience in the courts, that is not the case in a Tribunal. And it is well established that there is no bar on a litigant in a tribunal claiming for the cost of instructing non-legally qualified representatives. It seems to follow, in my view, that the Eastwood principle would apply as much to an in-house non-legally qualified representative as to an in-house legally qualified representative, at least in a tribunal where the non-legally qualified representative is undertaking a role that would otherwise be undertaken by a lawyer. 31. I note that the FTT has already considered this matter and reached the same conclusion in the case of Vardy Properties and another[2013] UKFTT 96 (TC) where Judge Poole said: [15] It is clear (see Re Eastwood deceased[1975] Ch 112 (Court of Appeal) that HMRC may recover costs in respect of their Solicitor’s Office employees, and the hourly rates claimed are in line with the relevant Guideline Hourly Rates set out in Appendix 2 to the Costs Guide.” … where a party was represented by a salaried solicitor [it is appropriate] to treat it as though it were the bill of an independent solicitor, assessing the reasonable and fair amount of a discretionary item having regard to all the circumstances of the case and to the principle that the taxed costs should not be more than an indemnity to the party against the expense he had incurred in the litigation. There might be special cases where costs awarded on the conventional basis would exceed the principle of indemnity, but it would be wrong and impracticable in cases of a salaried solicitor to require a break down of the expenses of a department in order to insure that the principle was not infringed. … [15] It is clear (see Re Eastwood deceased[1975] Ch 112 (Court of Appeal) that HMRC may recover costs in respect of their Solicitor’s Office employees, and the hourly rates claimed are in line with the relevant Guideline Hourly Rates set out in Appendix 2 to the Costs Guide.”