David Tipping considers the circumstances in which a taxpayer may be liable to pay HMRC’s legal costs in a tax dispute.
The general rule in tax disputes is that each party bears their own costs. This means that neither party will have to pay for any costs incurred by the other side in bringing the dispute to a resolution, irrespective of the outcome. Conversely, it also means that the winning side will not receive any support from the losing party with the cost of pursuing the appeal.
However, this rule is not absolute or universal and there are circumstances in which an unsuccessful taxpayer may find themselves liable not only for unpaid taxes, but also for HMRC’s legal costs on top.
First-Tier Tribunal appeals
The starting point is that there is no liability to pay costs (‘expenses’ in Scotland) without an
