UT (Tax & Chancery) UT/2022/000099 - [2024] UKUT 00184 (TCC)

In deciding whether to make a costs order, and if so, the quantum of that order, our jurisdiction is at large. We have regard to all the circumstances, including the conduct of both parties and the fact that the Appellant was the overall winner, to arrive at a fair and just outcome.

As set out above, we discount the Appellant’s costs by 15% to take into account HMRC’s success in relation to the Magee/PCB deals. We also agree with Mr Puzey that the remaining 85% must be reduced to reflect Mr Donaldson’s conduct, in particular in relation to his dishonesty. In deciding the amount of that further reduction we take into account that HMRC were required to spend time (and the related costs) which would not have been necessary had Mr Donaldson given honest, straightforward evidence, and if he had been candid in his dealings with HMRC and with the FTT. We do not accept Mr Puzey’s submission that cases involving public funds are in a special category (when compared, say, to frauds perpetrated on vulnerable individuals) but the fact that the dishonesty had an impact on public funds is a relevant factor. Altogether, we reduce the share of its costs which the Appellant can recover from 85% to 40% for those reasons.