Application for costs to be on an indemnity basis

The taxpayer arranged for individuals known as property guardians to occupy vacant properties owned by third party clients. These were tripartite arrangements involving property owners the taxpayer and the property guardians with the latter paying fees to the taxpayer in return for a right to occupy the premises. 

HMRC considered that the taxpayer’s supplies to property guardians were not exempt lettings of immovable property. The matter went to appeal which was determined in favour of the taxpayer after HMRC withdrew the assessments.

The appeal had been categorised as a complex case and the parties agreed that HMRC should pay the taxpayer’s costs. The dispute concerned the basis on which the costs should be assessed. 

The taxpayer said HMRC’s conduct had been unreasonable to ‘a high degree’ so costs should be awarded on the more generous indemnity basis rather than on a standard basis. The taxpayer said in support that HMRC had...