Pine (1) v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 March 2016 |
| Neutral Citation | [2016] UKUT 236 (TCC) |
| Date | 29 March 2016 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
Colin Bishopp
No case report has been prepared for this Upper Tribunal (UT) costs direction. The appellant's application for a protective costs direction was dismissed. Whilst Judge Bishopp noted that it was an unfortunate consequence of the manner in which the rules relating to the incidence of costs were drawn, in the Tax Chamber of the First-tier Tribunal (FTT) and in the UT, that a taxpayer insulated from a costs risk in the FTT, without any opportunity to avoid it, be exposed to a costs risk in the UT, costs must follow the event in the absence of special circumstances. As noted in Pine v R & C Commrs TAX[2016] BTC 508, Judge Bishopp's reasons for refusing the application may be taken by others as having established the principle that a protective costs direction will be made only in limited circumstances, and usually, though not invariably, when HMRC are the appellants.
It is directed as follows:
[1] The appellant's application for a direction that the tribunal shall make no direction in respect of costs, whatever the outcome of the appeal, save in the case of unreasonable conduct, is dismissed;
[2] The parties have liberty to apply for further directions.
[1] On 16 April 2014 the First-tier Tribunal (the F-tT) released full reasons for its decision rejecting the appellant's appeal against the imposition on her a penalty of £100 for the late submission of her self-assessment return for the year 2011–12. They rejected the appeal on two grounds: first, that (contrary to her submission) HMRC had validly given notice of the requirement to file a return by service of the notice on her accountant, who was her appointed agent; and, second, that there was no reasonable excuse for the lateness of the return. The F-tT later gave permission to appeal to this Tribunal on the first of those grounds but refused it on the second. I also refused permission to appeal on the second ground on the appellant's written application, but gave it when the application was renewed orally.
[2] The appellant then made an application for a protective costs direction, that is to say a direction that whatever the outcome of her appeal there should be no award of costs in either direction. That application came before me on 21 January 2016. The appellant's account, Mr Michael Weissbraun, appeared for her and Miss Barbara Belgrano appeared for HMRC.
[3] The essence of Mr Weissbraun's argument was that it is unfair that the appellant should be exposed to a costs direction when her purpose in pursuing the appeal has throughout been the resolution of what Mr Weissbraun considers to be a matter of principle, namely whether it is open to HMRC to serve notice to file a return upon a taxpayer's appointed agent. In this case the notice was sent to him rather than to the appellant because, it seems, the appellant lives in Israel. But, Mr Weissbraun says, the fact that HMRC succeeded on this point before the F-tT may lead them to serve notices on agents regardless of the residence of the taxpayer. He regards it as an important matter, from the perspective of tax agents, to establish that service on agents in that manner is not permissible. His fear was that, were the F-tT's decision to stand, HMRC would consider it open to them to send large numbers of notices to file returns to agents rather than taxpayers themselves, overburdening the agents who might in some circumstances not have instructions from that particular taxpayer in relation to the relevant year of assessment. The appeal is important also to the body of taxpayers who have appointed agents in earlier years but who have since withdrawn their instructions. Such taxpayers might find themselves in default when, unknown to them, a notice to file a return has been served on a former agent who has not passed it on. Mr Weissbraun added that, despite his having devoted...
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