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HMRC issued discovery assessments on the basis that the taxpayer was resident and ordinarily resident in the UK for the years 1996-97 to 2000-01. The taxpayer claimed he was non-resident for those years as he had separated from his wife.
On the first day of the appeal hearing before the Special Commissioner, the appellant's counsel told the Commissioner that the client was withdrawing the appeal. He told HMRC only a minute before this. HMRC applied for costs on the basis that the appellant had acted wholly unreasonably within the meaning of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 SI 1994/1811, reg 21(1).
The Special Commissioner agreed that the appellant had acted wholly unreasonably. The taxpayer appeared to have doctored evidence in order to mislead HMRC and was therefore planning on presenting misleading evidence to the court, unbeknown to his advisers.
HMRC's application for costs was allowed.
