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“Reasonable” for LiP not to understand obligations


HMRC: Response to application made clear how hopeless it was

Litigants in person (LiPs) who “do little to promote their cases until they are absolutely forced to” and do not “understand, let alone research” their obligations can still be regarded as acting reasonably, the First-tier Tribunal (FTT) has ruled.

Hearing a claim for costs by HM Revenue & Customs (HMRC) based on the unreasonable conduct of the claimant litigant in person, presiding tax chamber member G Noel Barrett said [1] Mukhter Ahmed had contributed “little if anything to proceedings” once they had started.

“To my mind it would be difficult to imagine an appellant who was less engaged with his own appeal. The appellant seemingly engaged just two or three times throughout the whole process…

“However, in my experience, unrepresented litigants frequently do little to promote their cases until they are absolutely forced to do so. Few litigants in person understand, let alone research, their obligations. Nor do they understand such notions as ‘the burden’ let alone ‘the standard’ of proof.

“It seems to me that where a number of litigants in person act in particular way that they could be properly be attributed to being a large enough class to be labelled as ‘the reasonable taxpayer’.”

The FTT heard that Mr Ahmed appealed in March this year against HMRC’s refusal to review its decision to impose penalties for late payment of self-assessment tax for the tax years 2010-11 and 2011-12.

Mr Barrett said Mr Ahmed should have appealed against the penalty decisions by May 2012 and 2013 respectively. Instead he appealed on 20 December 2018.

HMRC refused the appeal because it was late and Mr Ahmed had not provided any reasonable excuse for this.

Mr Ahmed lodged his notice of appeal with the FTT in March 2019 and it was listed for August.

In an exchange of letters beforehand, the tribunal told him that he was expected to attend the hearing. “No further communication was received from the appellant.”

The hearing went ahead but he was not present. Mr Ahmed told the tribunal clerk that he was fully aware of the hearing, had no intention of attending, had not notified the tribunal that he would not be attending and had been “chancing his arm as he had not wanted HMRC to collect the money quickly or to have bailiffs turning up” – but he knew he was liable to pay the HMRC penalties.

Mr Ahmed confirmed that he wanted to withdraw the appeal. HMRC applied for costs on the basis of unreasonable conduct.

The tribunal said the appeal was based in part on Mr Ahmed’s mistaken beliefs about the law, but said this was not “entirely unreasonably”.

Mr Barrett said: “Whilst the areas of law in question – as to whether the appellant needed to pay self-assessment tax and as to whether or not he needed to file a self-assessment return, are not complex areas of law… I would not have expected an unrepresented appellant to be aware of the case law in this area, nor to understand the nuances of whether a mistaken belief was of itself a reasonable one to hold and so amounted to a reasonable excuse.”

Given his view on how a reasonable taxpayer would have behaved, Mr Barrett found that Mr Ahmed “acted reasonably in doing (or indeed not doing) what he did and did not do” up to the point he received HMRC’s grounds for rejecting both his application to appeal late and the substantive appeal.

It should then have been clear to him that his case was “hopeless” and that he should withdraw. He ordered him to pay £500 towards HMRC’s costs of preparing for and attending the hearing.