An application for unreasonable costs by the appellants was allowed as the failure by HMRC to adduce evidence in support of a discovery assessment was unreasonable and sufficient to justify a costs award, but a reasonable award in the circumstances was £1.
The appellants used stamp duty land tax (SDLT) avoidance schemes. HM Revenue and Customs (HMRC) had not opened enquiries into the appellants’ SDLT returns within the statutory enquiry window but raised discovery assessments instead. HMRC had also issued determinations on the basis that SDLT was payable on notional transactions (under section FA 2003, s 75A). The appellants appealed.
The issues for the First-tier Tribunal (FTT) ([2021] UKFTT 297 (TC)) centred on the validity of the discovery assessments. As such, HMRC bore the burden of proving that they made a ‘discovery.’ HMRC also had to establish that the inaccuracy or insufficiency discovered came about due to