Spc00686

SPECIAL COMMISSIONERS -- Costs -- Regulation 21 -- Behaviour wholly unreasonable?  Not wholly unreasonable -- Application refused

THE SPECIAL COMMISSIONERS					

	GC TRADING Limited	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		Special Commissioner: 	ADRIAN SHIPWRIGHT

Sitting in public in London on 20 March 2008 

Simon Littlejohns of PKF (UK) LLP for the Appellant

Susan Jones of the Appeals Unit HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2008

DECISION

Introduction
1.	 This decision concerns the Appellant's application for the costs of the appeal. 
2.	 The appellant was successful in its appeal (see decision SpC 630) (“the Appeal”).  I announced my decision at the end of the hearing of the costs application and this written decision records my reasons for deciding that the Respondent had not acted wholly unreasonably and not awarding costs.  The Appellant sought to make further representations after I had announced my decision.  
3.	The Respondent objected to this on the grounds that the decision had been made and announced.  I decided not to allow further representations in the circumstances as a matter of case management. All the pertinent arguments and facts had already been adduced.  
The Issue
4.	The issue here is whether I should make an order awarding the Appellant the costs of or incidental to the appeal on the basis that the Respondent "... has acted wholly unreasonably in connection with the hearing..." of the appeal.
The Law
5.	Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994 provides for a limited cost jurisdiction. Power is given to the Special Commissioners to make an order awarding the costs of, or incidental to, the hearing of any proceedings by the Tribunal against any party to those proceedings (including a party who has withdrawn his appeal all application) if the Tribunal is of the opinion that the party has acted wholly unreasonably in connection with the hearing in question".  There is no inherent power to award costs.
6.	I was provided with copies of the following decisions:
(1)	J M Collins and XI Software Ltd v Laing SpC 472;
(2)	Nightswood B V v HMRC SpC 651;
(3)	Gamble v Rowe.
7.	I was referred to by the Appellants to the cases of Carter v Hunt and Robertson v IRC.
Evidence
8.	I heard oral evidence from:
(1)	Peter Colin Williams, the specialist in the Appeals Unit who appeared at the hearing of the Appeal for the Respondent
(2)	Mark Smith, HMIT who had dealt with the case.

A witness statement was provided for each.  They were cross-examined. 
Findings
9.	I make the following findings of fact.
10.	Mr Williams said paragraph 10 of his witness statement "Throughout the period in which the company's appeal was before the tribunal, and at the hearing itself, I acted in good faith, with full belief in the correctness and reasonableness of the arguments that I presented".  I entirely accept this and find this as a fact.
11.	I record that Mr Williams acted properly, reasonably and courteously throughout the hearing of the appeal.  He did press his arguments vigorously and cogently as any advocate should but in no way improperly.  I am grateful for the way in which he conducted the Appeal.
12.	Mr Smith was the HMRC officer dealing with the case.  He said paragraph seven of his witness statement "I spoke to Mr Williams several times regarding the progress of the case that had no input into his decision making.  Mr Williams did consult me regarding his trust goes on arguments that I did no more than read it.  I made no proposals for amendment".  He continued, "My own decision making was not constrained by anyone else and I placed no constraints on Mr Williams".  I entirely accept this and find this as fact.
13.	I am not concerned with anything other than the question the Respondent has acted wholly unreasonably in connection with the hearing of the appeal. How matters were dealt with otherwise than in connection with, or incidental to, the hearing of the appeal are not within my jurisdiction and I make no findings in respect of them.
14.	I find that the Respondent has acted wholly reasonably in connection with, or incidental to,  the hearing of the appeal and make no criticism of Mr Williams whom I have already found to have acted reasonably in connection with the hearing of the appeal. 
15.	I also find as a fact that it was not unreasonable for the Respondent to run the arguments that it sought to run at the hearing.  There was no clear authority covering the point at issue and it was possible to read the legislation in the way contended for by the Respondent. I decided that the more natural meaning favoured the Appellant’s contentions. There was also the question of its application in the particular circumstances which depended on findings of fact.  As I said at paragraph 24 of the decision on the Appeal " I have found that on the particular facts the money raised by GCT from the issue of the shares to Mr Goddard on 31March 1999 was employed wholly by GCT for a qualifying purpose within the requisite period notwithstanding the loans".

Arguments of the Parties 
16.	In essence, the Appellant argued that the Respondent should not have proceeded with the case as it was a "flagrant attempt to bully the taxpayer into submission with arguments which never had any chance of success".  It was wholly unreasonable for the Respondent to pursue a case in which the argument advanced had no statutory or case law support.
17.	In essence, the Respondent argued that it had acted properly and in good faith.  Accordingly, it had not acted wholly unreasonably in connection with the hearing of the appeal.
Conclusion
18.	I am only concerned with the question whether or not the Respondent has acted wholly unreasonably in connection with the hearing of the appeal.  I have only considered this and have not considered whether the behaviour of the Respondent otherwise than in connection with or incidental to the hearing was reasonable or not.
19.	Having found that the Respondent has acted wholly reasonably in connection with the hearing of the appeal I have no jurisdiction to award costs.  Accordingly, the appeal is dismissed and there is no order as to costs.

ADRIAN SHIPWRIGHT

SPECIAL COMMISSIONER
RELEASE DATE: 14 May 2008

SC/3161/2006