Application for costs because of HMRC’s unreasonable conduct

The Cheshire Centre for Independent Living applied for an order that HMRC pay its costs of appealing before the First-tier Tribunal. The hearing went in the centre’s favour but HMRC then appealed to the Upper Tribunal. One of its grounds of appeal was entirely new and had it been raised in the earlier tribunal proceedings the centre said it would have accepted it disposed of the appeal in favour of HMRC. This was reflected in a consent order settling the Upper Tribunal appeal.

In the first hearing the First-tier Tribunal ruled that a supply of payroll services to disabled people was VAT exempt because it was linked to the provision of welfare services. HMRC’s new ground of appeal was that the payroll services could not be ancillary to a principal supply of exempt care provided by a personal assistant because the principal supply was not...