In FWarren v HMRC[2017] UKFTT 521 (26 June 2017), the FTT found that an appellant, in a complex case, who had withdrawn his appeal to comply with a follower notice (FA 2014 s 204), was liable for costs.
Mr Warren was a member of the MCashback Software 6 LLP and he had been substituted as the appellant in place of the LLP in its appeal against HMRC. HMRC subsequently issued a partnership follower notice to the LLP, following the Supreme Court’s decision in Tower MCashback [2011] UKSC 19. The corrective action required by the notice included the withdrawal of the appeal. Mr Warren was then faced with a dilemma; if he pursued his appeal, he risked penalties. He withdrew his appeal and HMRC applied for costs.
The case had been categorised as complex and Mr Warren contended that he had not had the opportunity to opt out as he had been substituted as the appellant in place of the LLP. The FTT observed, however, that when the tribunal substitutes an appellant, it is free to give any appropriate direction. No direction had been given as to costs, so the case remained a complex case in which the appellant had not opted out.
The tribunal also found that the merits of the appeal were not affected by FA 2014. If a penalty had been imposed, Mr Warren could have appealed against it and he may have been able to justify not taking the corrective action required by the follower notice.
Finally, the tribunal found that Mr Warren’s liability included costs incurred before his substitution as appellant, as any other result would be unfair to HMRC.
Why it matters: The FTT observed: ‘In the course of litigation many things can happen which might alter the view a party takes as to the desirability of continuing the litigation. That does not mean that a party withdrawing an appeal should be able to avoid the cost consequences of doing so.’
In FWarren v HMRC[2017] UKFTT 521 (26 June 2017), the FTT found that an appellant, in a complex case, who had withdrawn his appeal to comply with a follower notice (FA 2014 s 204), was liable for costs.
Mr Warren was a member of the MCashback Software 6 LLP and he had been substituted as the appellant in place of the LLP in its appeal against HMRC. HMRC subsequently issued a partnership follower notice to the LLP, following the Supreme Court’s decision in Tower MCashback [2011] UKSC 19. The corrective action required by the notice included the withdrawal of the appeal. Mr Warren was then faced with a dilemma; if he pursued his appeal, he risked penalties. He withdrew his appeal and HMRC applied for costs.
The case had been categorised as complex and Mr Warren contended that he had not had the opportunity to opt out as he had been substituted as the appellant in place of the LLP. The FTT observed, however, that when the tribunal substitutes an appellant, it is free to give any appropriate direction. No direction had been given as to costs, so the case remained a complex case in which the appellant had not opted out.
The tribunal also found that the merits of the appeal were not affected by FA 2014. If a penalty had been imposed, Mr Warren could have appealed against it and he may have been able to justify not taking the corrective action required by the follower notice.
Finally, the tribunal found that Mr Warren’s liability included costs incurred before his substitution as appellant, as any other result would be unfair to HMRC.
Why it matters: The FTT observed: ‘In the course of litigation many things can happen which might alter the view a party takes as to the desirability of continuing the litigation. That does not mean that a party withdrawing an appeal should be able to avoid the cost consequences of doing so.’
