Anthony Wong v The Commissioners for HMRC [2026] UKFTT 822 (TC)

[2026] UKFTT 00822 (TC)Case No TC 09906
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 27 May 2026Date Judgment date: 03 June 2026
Decided on the papers
Appeal reference: TC/2025/04847
VAT – personal liability notice – costs application – 43 days after being notified of the appeal HMRC decided not to defend it – no unreasonable conduct – application dismissed
Before
TRIBUNAL JUDGE MATTHEW DONMALL
Between
ANTHONY WONGAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentThe Tribunal determined the Appellant’s application for costs of 24 February 2026 on the papers without a hearing, both parties having made representations in respect of the application.DECISION

Introduction

[1]This is an application by Anthony Wong for an award of costs (the Application)under rule 10(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (FTT Rules) in the sum of £5,500. HMRC object to the application.

Relevant legal principles

[2]Section 29 Tribunal Courts and Enforcement Act 2007 provides that the award of “The costs of and incidental to all proceedings” in the Tribunal shall be at the discretion of the Tribunal and subject to the FTT Rules.[3]Rule 10(1) FTT Rules provides that the Tribunal may only make an order for costs in limited cases including(a) wasted costs,(b) “if the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending or conducting the proceedings” and(c) in a case allocated to the complex track and in respect of which the appellant has not opted out of the costs’. The intention behind Rule 10 of the FTT rules is “that the First-tier Tribunal is designed in general to be a ‘no costs shifting’ jurisdiction … Rule 10 should therefore be regarded as an exception to this general expectation that both sides will bear their own costs, whatever the result of the appeal”, Distinctive Care Ltd v HMRC [2019] EWCA Civ 1010 per Rose LJ at [7].[4]The difference between wasted costs under rule 10(1)(a) and costs for unreasonable conduct under rule 10(1)(b) is the identity of who is to pay the costs. In the case of a wasted costs order it is the representative and in the case of costs for unreasonable conduct it is the litigating party.[5]When considering whether a decision to withdraw amounts to unreasonable conduct the Tribunal is bound to follow the approach directed by the Upper Tribunal in Tarafdar v HMRC [2014] UKUT 00362 in which the Upper Tribunal at [34] considered the approach to be to answer the following questions:(1) What was the reason for withdrawal of that party from the appeal?(2) Having regard to that reason, could that party have withdrawn at an earlier stage in proceedings?(3) Was it unreasonable for that party not to have withdrawn at an earlier stage?[6]This reference in Tarafdar to “at an earlier stage in proceedings” indicates that it is conduct in the proceedings which is relevant for rule 10(1)(b).In Distinctive Care Ltd, the Court of Appeal rejected an argument that HMRC in issuing the appealable decision are “bringing” the proceedings, and made clear that the proceedings in question are those before the FTT. At [19]:
“The earliest conduct that is relevant for the purposes of rule 10(1)(b) is the bringing of the proceedings, that is the proceedings before the FTT.”
To put it another way, it is not possible for a party to rely on allegedly unreasonable behaviour of the other party prior to the commencement of the appeal, as a basis for a costs order under rule 10(1)(b). Rose LJ at [25] approved the articulation of the approach in Cancino v Secretary of State for the Home Department [2015] UKFTT 00059 (IAC):
“a. Has the Appellant acted unreasonably in bringing an appeal? b. Has the Appellant acted unreasonably in his conduct of the appeal? c. Has the Respondent acted unreasonably in defending the appeal? d. Has the Respondent acted unreasonably in conducting its defence of the appeal?”
Further, given that the FTT Rules do not require an appellant to serve notice on HMRC, the conduct of HMRC “in the proceedings” is that conduct after it is notified of the appeal [31].[7]A claim to costs must be made, in writing (rule 10(3)(a)); may be made at any time but no later than 28 days after the final determination of the appeal (rule 10(4)) and must be accompanied by a schedule of costs (rule 10(3)(b)). Any deficiency in the schedule does not of itself preclude a costs order being made, see Harris v HMRC [2022] UKFTT 00447 (TC).

Background to the application

[8]The procedural history leading up to the Application may be shortly stated:(1) At relevant times, the Appellant was the director of Manchester Homewares Ltd (MH).(2) On 14 April 2025, VAT assessments in the sum of £819,559 (the VAT Assessments) were made against MH.(3) On 13 June 2025, a penalty under Schedule 24 of the Finance Act 2007 was notified against MH in the sum of £516,630.87.(4) On 30 June 2025, the liquidator of MH appealed the VAT Assessments. This was given Tribunal reference TC/2025/02678 (the MH Appeal).(5) On 14 August 2025, a personal liability penalty was notified against the Appellant personally in the sum of £516,630.87.(6) The Appellant requested a review of the personal liability penalty on 20 August 2025.(7) On 4 December 2025, HMRC upheld the personal liability penalty, save that the amount was varied to £516,347.37 (the PLN).(8) On 8 December 2025, the Appellant submitted a notice of appeal against the PLN (the Appeal). He stated that he did not have a representative. The grounds for appeal were as follows: The reviewer did not base his assessment on the facts. The email address HMRC informed me of is not mine, I made it clear I have no knowledge of this email or access to it. The Amazon account that I created didn't use that email address. The Amazon account that I created hasn't had any activity within it. The Amazon account that apparently used this other email address was created completely without my knowledge. It would be unjust to make me personally liable for my company details being fraudulently used by an unknown third party.(9) On 8 January 2026, the Tribunal wrote to HMRC notifying it of the Appeal, allocating it to proceed under the standard category and making related directions, including for HMRC to provide its statement of case within 60 days.(10) As regards the MH Appeal, after hardship was accepted by HMRC, on 14 January 2026 the Tribunal wrote to the parties in that appeal, also assigning it to proceed under the standard category and giving 60 days for the statement of case.(11) On 20 February 2026, HMRC wrote to the Tribunal and the Appellant as follows: This letter, which is copied to the Appellant, is to confirm that HMRC does not intend to defend the above appeal. We would accordingly invite the Tribunal to close its file.(12) On the same day, HMRC also confirmed in writing that they did not intend to defend the MH Appeal.(13) On 24 February 2026, Brian White of Brian White Tax Resolution Ltd wrote on behalf of the Appellant making the Application for costs against HMRC as follows: HMRC have withdrawn from the above appeal and have notified the Tribunal. This is a claim for costs against HMRC for this appeal, is attached in accordance with Rule 10(3) of the Tribunal Procedure (First-Tier tribunal) (Tax Chamber) Rules 2009. These have all been invoiced and copies of the invoices can be forwarded on request as well (there are just 3) .We were brought in only just before the need to make an Appeal to Tribunal, so all costs relate to the Tribunal Appeal process itself ; its briefing and ADR submissions and preparation as the appeal was stayed pending ADR HMRC withdrew without any explanation once we had applied for ADR ; the matter should never have progressed to ADR as the facts never changed. The claim was for in excess of £0.5m of VAT demanded personally from the individual, who had never received any monies to be taxed upon, it caused untold hardship for the individual in terms of mental stress and suffering . A separate claim will be made by the Liquidator , who is in cc for the separate Tribunal TC/2025/02678 re the company; whereby HMRC also withdrew in full pre ADR(14) An N260 form was attached to the Application, in the sum of £5,500 for 5 hours of personal attendances, 3 hours of letters out / emails and 3 hours of telephone, all at £500 an hour.(15) On 3 March 2026, HMRC emailed Mr White asking for copies of the invoices related to the N260 schedule of costs.(16) On 4 March 2026, Mr White replied stating “The invoices all related to the appeal paid for by Mr AW”.(17) On 7 April 2026, the Tribunal wrote to the Appellant, asking him to provide grounds and reasons for the Application, and to HMRC, to make any representations on the Application.(18) On 9 April 2026, the Appellant emailed as follows: I accept that costs can only be awarded where the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending or conducting the proceedings. And that the definition of wasted costs are those costs incurred as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative, or which, in the light of any such act or omission occurring after they were incurred, the relevant Tribunal considers it is unreasonable to expect that party to pay. In this case HMRC were told at the outset that my account with Amazon had been hijacked by an unknown third party and any tax liabilities from those transactions had nothing to do with me. Yet that did not stop HMRC assessing the company and then threatening me with personal bankruptcy by issuing a Personal Liability notice. The information provided to HMRC did not change one iota and was crystal clear from the initial enquiry that the transactions had nothing to do with me. HMRC only pulled out after we engaged Brian White who made it clear to HMRC that they would lose at Tribunal. Our Adviser advised HMRC almost 2 years ago that they had got facts seriously wrong, yet they still threatened me with personal bankruptcy and issued assessments on me for over £0.5m. The proceedings have been unreasonable from the outset, subsequently resulting in the closure of my business and the extensive personal anguish accompanied with it.(19) On 27 April 2026, HMRC submitted their objection to the Application, contending: (a) The decision to withdraw was in no way due to any contact from Mr White, whose only contact prior to the 20 February 2026 was in relation to the request of a review in respect of MH. (b) Conduct before the proceedings is not relevant and the Appellant has failed to detail what conduct in the proceedings was unreasonable. (c) HMRC did act promptly once it was notified of the appeal. (d) HMRC withdrew after the Litigator conducted a considered review of the matter, including discussions with the Litigator dealing with the MH Appeal, consulted with various internal stakeholders, and concluded that the appeal should not be defended. (e) In any case, of the three invoices, that of 19 July 2024 for £3,500 plus VAT cannot relate to the costs of or incidental to the Appeal and so the claim for £5,500 is in breach of the indemnity principle, and the schedule lacks sufficient detail to allow summary assessment.(20) HMRC appended to their objection three invoices from Brian White Tax Resolution Ltd. These were: an invoice dated 19 July 2024 to MH for £3,500 plus VAT with description “Vat advice jul 24 on account”; an invoice dated 1 January 2026 for £800+VAT to MH with description “tax fees dec 25”, and an invoice to the Appellant dated 22 February 2026 for £1,500 plus VAT, described as “final tax fees re vat matter closeout”.(21) On 27 April 2026, Mr White responded by email to HMRC’s objection: The Personal Liability Notice (PLN) in this case derived from the Manchester Housewares Corporate Matters. Exactly the same facts. We were appointed to deal with the substantive matter in July 2024. The suggestion that our involvement started in Feb 2026 is deliberately misleading by hmrc . The PLN was a direct output of the Corporate matters. The damage to the Appellant was such that he would have gone bankrupt and the mental stress was significant. The PLN should never have been issued as hmrc knew the underlying facts from as far back as 2024! Copied to the Respondent who have sought to suggest that no work was done.

Discussion

[9]I consider this Application in the light of the relevant legal principles identified at paragraphs 2 to 6 above, and in particular, the clear principle articulated by the Court of Appeal in Distinctive Care that for conduct to give rise to the possibility of costs under rule 10(1)(b), it must be conduct during the proceedings, and not before them.[10]In this case, neither the Application of 24 February 2026 nor the further representations from the Appellant of 9 April 2026 specifically address the behaviour of HMRC after HMRC was notified of the appeal on 8 January 2026. The Appellant asserts that “The proceedings have been unreasonable from the outset”,but this reference to “the proceedings” is not to the present Appeal but rather to the history of the prior enquiry by HMRC that led to the VAT Assessments against MH, the penalty against MH and then the PLN against himself. While it is understandable that the Appellant might view things in this way, the case law is clear that the Application cannot rely on things that occurred prior to the commencement of this Appeal as a basis for a costs decision under Rule 10(1)(b).[11]As regards the period since 8 January 2026, HMRC reviewed the case and decided not to contest the appeal on 20 February 2026, 43 days later. Addressing the third question in Tarafdar, I do not consider that it was unreasonable for HMRC not to have withdrawn at a materially earlier stage after notification on 8 January 2026. The Tribunal directed that HMRC provide a statement of case within 60 days, and the decision was taken within that time not to defend the appeal. To put it another way, consistent with Distinctive Care at [25] and Cancino, there never was a defence of the appeal by HMRC, and so no question arises as to whether that defence, or the conduct of it, was unreasonable.[12]Finally, I should note that on the evidence before me I do not accept that HMRC’s decision to withdraw on 20 February 2026 was directly because the Appellant engaged Mr White. There is a dispute of fact about this: the Appellant’s contention of 9 April 2026 is that “HMRC only pulled out after we engaged Brian White who made it clear to HMRC that they would lose at Tribunal”, whereas HMRC deny this in their objection. I have not been referred to any correspondence from Mr White to HMRC within the period 8 January 2026 to 20 February 2026, nor is there any witness evidence of any representations being made orally by Mr White in this time. However, for the avoidance of doubt, even if the position was that HMRC’s decision not to defend was as a result of representations from Mr White, that would not make a difference to my conclusion: the point would remain that the timeframe from notification on 8 January 2026 to withdrawal on 20 February 2026 is not unreasonable.[13]For these reasons, I reject the Application for costs.[14]In light of that conclusion, I do not need to address any question of quantum of costs. I would however note that while a costs order is not necessarily precluded if there are deficiencies in the schedule, I would not have been satisfied that the appropriate quantum of costs would be £5,500 as claimed in the N260 in this case. Only one of the three invoices was in respect of services provided to the Appellant himself, the other two were invoices for services to MH; those other two invoices also predated notification of the appeal on 8 January 2026; and the total claimed in the N260 (£5,500) also does not correspond with the aggregate of the three invoices produced for HMRC.

Right to apply for permission to appeal

[15]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. Release date: 03 June 2026