Case: Late application opting out of complex costs regime allowed

[2019] UKFTT 0221 (TC)

Judge Christopher McNall

Decision released 3 April 2019

Inheritance tax - Procedure - Costs - Application to opt-out of the complex track costs regime out of time - Application allowed - Disclosure - Application by Appellant for HMRC to disclose certain documents underlying its determination - Application dismissed – Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273), r. 2, 5(3), 10.

Kersner [2019] TC 07068


HMRC determined a £1.277m inheritance tax liability on Mrs Kersner (the appellant) on the basis that she was not UK domiciled at the time of a gift and that therefore the spousal exemption did not apply. The appellant had appealed against HMRC’s decision.

The case had been allocated to the complex track, and therefore if the appellant did not opt out of the complex track costs regime within 28 days from when she was notified that the case had been allocated as complex the costs would follow the event.

In relation to the appeal, the appellant made applications:

to opt-out of the complex track costs regime;

in relation to disclosure;

in relation to the inclusion of certain documents in the bundle (this had since fallen away); and

in relation to the correct heading for a particular document.

The FTT allowed the appellant’s application to opt-out of the complex track costs regime.

In line with the guidance of the Upper Tribunal in Martland v R & C Commrs [2018] BTC 525, the FTT regarded the right approach in relation to the late application to be to consider: the length of the delay, and whether it was serious or significant; the reason(s) for any delay and whether any reason was a good one; and the circumstances of the case.

Although the appellant’s initial request to opt out of the complex track costs regime appeared to have been made about five and a half months late the true delay was only weeks. This was because the tribunal had approved HMRC’s request to extend the time for their statement of case which equated to a standstill. As such the delay was neither serious nor significant.

Even if the FTT had been wrong about that, it found that there was nonetheless another good reason to extend time because: the letter advising the appellant of the allocation of the appeal to the complex track had only been posted to the appellant in Israel and not to her authorised adviser in the UK; may have been sent to the wrong address; and the 28 day response time did not take into account that the notice had been sent abroad and would therefore have taken more time than if being sent within the UK.

Taking this into account and in all the circumstances, the FTT decided to treat the appellant's email seeking to opt out of the costs regime as an in-time notification and accordingly directed that the appeal would not be subject to the cost-shifting provisions.

The FTT dismissed the appellant's applications for disclosure and for the heading of a document to be changed.


This case acts as a useful reminder that if a case is allocated as complex the costs automatically follow the event (i.e. the winner is awarded costs against the other side), unless within 28 days of being notified that the case has been allocated as complex the taxpayer has written to the tribunal requesting to opt out of the costs regime.

For commentary on costs awards in the FTT, see In-Depth at ¶189-485.

Be the first to vote