What is unreasonable?

Taxpayer’s application for costs

The taxpayers applied to the First-tier Tribunal for costs on the ground that HMRC had acted unreasonably. They had applied to the tribunal for a direction that HMRC issue closure notices. Six days before the date listed for the hearing HMRC did so.

The First-tier Tribunal had to answer three questions set out by the Upper Tribunal in Tarafdar v CRC [2014] UKUT 362.

First why did HMRC withdraw from the appeal? The tribunal decided this was because it had received the information that had been requested by notices and after taking advice from counsel applied it in preparing the closure notices.

Next having regard to that reason could HMRC have withdrawn earlier in the proceedings? The tribunal found that HMRC could have issued the closure notices earlier had it taken less time in applying the information received and preparing them.