Unreasonable behaviour in late withdrawal of appeal

HMRC applied for a wasted costs order against the taxpayer and its adviser. The latter had withdrawn an appeal against an accelerated payment notice penalty to the First-tier Tribunal only two days before the scheduled hearing and without informing HMRC. The department said this was unreasonable. In fact it considered bringing the appeal at all unreasonable given that it was almost bound to fail. The grounds for the appeal had been that the taxpayer had made an offer to settle its liability but HMRC delayed responding so the due date for the accelerated payment notice passed. Also the taxpayer lacked the funds to pay.

The First-tier Tribunal agreed it had been unreasonable to lodge the appeal. The grounds were not ‘elaborated upon’ and had no reasonable prospect of success. On the withdrawal neither the taxpayer nor the adviser explained the reason for this and indeed they...