.png)
.png)
HMRC refused the application saying that two of the three tests, namely business and turnover, specified in TA 1988, s 565 were not satisfied.
The taxpayer appealed to the Special Commissioners. A month before the hearing, HMRC told the taxpayer that they were also going to raise the compliance test. Then later in February, HMRC agreed that the appellant satisfied the business test and, just before the hearing date, agreed that the taxpayer had satisfied the turnover test.
It was clear that the compliance test could not be dealt with at the hearing, since HMRC had delayed providing relevant information, so a preliminary issue was raised as to whether HMRC could raise the compliance test as a new issue.
The Special Commissioner said that the test could not be raised, but this was subsequently overruled in the High Court. The taxpayer applied for costs on the ground that HMRC had been wholly unreasonable.
The Special Commissioner held that HMRC had acted wholly unreasonably in supplying information relating to the compliance test the day before the hearing.
The application for costs was granted.
