An application by the taxpayers to the tribunal for costs was successful after HMRC had behaved unreasonably in bringing a case against the taxpayers for negligence.
The appellants applied for costs following an earlier decision of the First-tier Tribunal (FTT) ([2014] UKFTT 421 (TC)), after HM Revenue and Customs (HMRC) had sought penalties for the negligent delivery of incorrect tax returns. The FTT found that HMRC had failed to adduce evidence to satisfy the burden of establishing a prima facie case of negligence against the appellants.
The application for costs raised two separate issues; firstly, whether there should be a costs direction against HMRC; and secondly, how the costs should be assessed.
On the first issue, the appellants’ application for costs relied on the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules, SI 2009/273, rule 10(1)(b), pursuant to which the tribunal can
