HMRC’s reliance on an argument up to and throughout a tribunal hearing that the taxpayer was careless by not notifying HMRC of his tax position when he had clearly done so was unreasonable and therefore the taxpayer’s application for costs was successful. 

The appellant, a director of five companies, filed his self-assessment return for the tax year 2013/14 in December 2014. On 2 March 2016, he signed as director each company’s accounts for their accounting periods ended 31 December 2014. These showed that loans from the companies to the appellant had been written off with the effect of increasing his tax liability for 2013/14. However, the exact amounts written off (and therefore the increased tax due) remained uncertain and were not finalised or agreed with HM Revenue and Customs (HMRC) for some time. Consequently, it was too late for the appellant to amend his 2013/14 tax return. 

On 19 March 2020, HMRC issued a discovery