George Rowell secures costs award in VAT appeal

September 18, 2017

George Rowell, instructed by Covertax Ltd,  successfully applied for the tax-payer’s legal costs in an appeal against VAT assessments for £1.4m. The Tax Tribunal rarely makes costs awards, but it did so in this case because of HMRC’s unreasonable litigation conduct.

The tax-payer was a county taxi association representing around 200 drivers who made supplies to their local council. HMRC raised the assessments on the basis that the association ought to have charged the council VAT on the supplies for the previous six years. Four years into the dispute, and 16 months after the appeal had been lodged, HMRC abandoned the assessments for reasons which ought to have been known to them all along.

The Tribunal found that this amounted to unreasonable conduct. It rejected HMRC’s argument that a public body should be free to walk away from litigation without compensating the other party for its costs thrown away. It awarded the tax-payer its costs of and incidental to the proceedings, subject to detailed assessment if not agreed.

The Tribunal also accepted the tax-payer’s subsidiary argument that HMRC should pay its costs of an unsuccessful ADR process which had taken place earlier in the proceedings. HMRC had acted unreasonably by sending to the ADR meeting officers who were unable to engage with the technical subject matter of the case or vary HMRC’s position in any way.

The Tribunal’s decision is available here.

George is a member of the tax department at Exchange Chambers.