A v Commissioners for HMRC

This is an appeal by Mrs A against a closure notice for the 2018-19 tax year issued by the Respondents (‘HMRC’) on 5 January 2021. The closure notice reduced a claim made by Mrs A in her self assessment tax return for 2018-19 for a repayment of overpaid tax of £467,683.82 to a refund of £6,136.02. The amount at stake in this appeal is, therefore, £461,547.80.

The claim for repayment related to income tax deducted on a payment of £1,055,000 (‘the Compensation Sum’) paid to Mrs A under an agreement (‘the Settlement Agreement’) dated 11 May 2018 between Mrs A and her employer (‘the Employer’), and its owner (‘the Owner’).

In the Settlement Agreement, Mrs A agreed to withdraw her claim against the Employer and the Owner in the Employment Tribunal and waive any other claims she may have had against them. She also agreed to be bound by certain confidentiality and non-disclosure obligations in relation to, among other things, the Employment Tribunal claim and the events that gave rise to it, and the Settlement Agreement. Mrs A’s claim in the Employment Tribunal related to a grievance that she had brought under the Employer’s grievance procedure alleging, among other things, sexual harassment by the Owner. The Owner has always denied the allegations made by Mrs A. Whether the allegations have any foundation is irrelevant to the issue to be decided in this appeal and we make no findings in relation to them save as to record the process that led to the making of the Settlement Agreement on 11 May 2018 and the payment of the Compensation Sum.

HMRC took the view that the Compensation Sum was taxable under section 401(1) and section 403(1) of the Income Tax (Earnings and Pensions) Act 2003 (‘ITEPA’). Those provisions treat payments which are received directly or indirectly in consideration or in consequence of, or otherwise in connection with, the termination of a person’s employment as employment income of the employee for the tax year in which it is received if and to the extent such payments exceed £30,000.

Mrs A contended that the Compensation Sum had no connection with the termination of her employment by the Employer but was wholly in consideration of her agreeing to enter into the confidentiality and non-disclosure obligations. As such, Mrs A contended that the Compensation Sum did not fall within section 401(1) or the charge to tax under any other provision.

HMRC, however, argued that if the Compensation Sum was consideration for Mrs A entering into the confidentiality and non-disclosure obligations in the Settlement Agreement then it was payment for a restrictive undertaking in connection with her current, future or past employment and taxable under section 225 ITEPA as earnings from employment for the tax year in which it was made. Mrs A accepted that the confidentiality and non-disclosure obligations are “an undertaking which restricts [her] conduct or activities”, which is the definition of “restrictive undertaking” in section 225(8). She submitted, however, that the definition should be qualified by adding the words “in connection with her current, future or past employment” from section 225(1) after “restrictive undertaking”. If read in that way, Mrs A argued, then the confidentiality and non-disclosure obligations did not fall within section 225 because they did not restrict her conduct or activities in relation to any employment.

Accordingly, the only issues in this appeal are:

Having heard the evidence for Mrs A and the submissions of both parties, we have decided that, for the reasons set out below, Mrs A’s appeal must be dismissed.

With the consent of the parties, the hearing was held by video using the Tribunal video hearing system. The hearing had originally been listed to take place by video because of the Covid 19 pandemic. Subsequently, the parties asked for the hearing to be face to face but no hearing room was available in the most convenient venue for Mrs A on the hearing dates and, rather than lose the dates, the parties elected to proceed with the hearing by video.

The video hearing was attended by Mrs A, her representative Mr Mark Fink and her witness Ms B. For HMRC, the hearing was attended by Mr Joshua Carey and Ms Marianne Tutin, both of counsel, and by a member of HMRC’s Solicitor’s Office and various HMRC observers. The documents to which we were referred were a main bundle of 313 pages, an authorities bundle of 475 pages, Mrs A’s skeleton argument of 21 pages and HMRC’s skeleton argument of 13 pages.

Following an application made by Mrs A under rule 32 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (‘the FTT Rules’), Judge Vos made a direction, in April 2022, that the hearing should be held in private and any decision published subsequently should be anonymised. Accordingly, no prior notice of the hearing or information about how members of the public could observe the hearing remotely was published on the gov.uk website.

As stated above, we were provided with a hearing bundle which contained the documents on which the parties relied and to many of which they referred. The bundle also contained three witness statements: one from Mrs A and two others from witnesses giving evidence on her behalf: Ms B and Mr C.

Mr C was unable to attend the hearing and so was not available to answer any questions that Mr Carey might have wished to put to him. Accordingly, although we had read Mr C’s witness statement, we have given it no weight in reaching our decision.

Ms B did attend the hearing but Mr Carey stated that he did not have any questions for her. In the absence of any cross-examination by HMRC, we accept Ms B’s evidence in her witness statement. In summary, her evidence was that she was Senior Retail Operations Manager for the Employer from September 2009 until the business went into administration in 2021. In October 2017, Mrs A asked Ms B to act as her representative during a grievance process against the Owner and Ms B agreed. Ms B describes the grievance process and certain meetings that she attended with Mrs A or observed between Mrs A and the Owner between the final grievance appeal outcome meeting and Mrs A leaving the business in May 2018. Although we accept it as truthful, we find that Ms B’s evidence has no relevance to the issues that we must decide in this appeal.

At the hearing, Mrs A gave evidence and was asked questions by Mr Carey. We found Mrs A to be credible and fully accept her evidence of matters of fact about the grievance procedure, the Employment Tribunal proceedings and her interactions with the Owner in the weeks immediately preceding the signing of the Settlement Agreement which we incorporate in our findings of fact below. We do not accept her evidence of the intent or effect of the Settlement Agreement for the purposes of ITEPA which is a question of law to be resolved by construction of the terms of the Settlement Agreement in their factual context.

On the basis of the statement of agreed facts and evidence, both written and oral, we find the material facts to be as follows.

Mrs A had worked for the Employer since May 2007. From June 2012, Mrs A was employed as Head of Retail in the Employer and, in 2017, was acting as Interim Retail Director.

In a formal grievance letter dated 23 October 2017, Mrs A raised a grievance against the Employer and the Owner alleging, among other things, harassment on the grounds of sex, bullying, victimisation and intimidation by the Owner. When she raised the grievance with the Employer, Mrs A’s intention was that the Employer would help her to resolve the situation and carry on with her job. She was not seeking anything other than for the harassment to stop. When Mr Carey put it to her that it would be difficult to return to work in the circumstances, Mrs A agreed but maintained that she did want to go back and had told the HR Director this.

The Employer’s grievance procedure was brought to an end by a letter dated 18 December 2017 which did not uphold Mrs A’s grievance. As was permitted by the relevant policy, Mrs A lodged an appeal against the outcome of the grievance procedure by a letter dated 28 December 2017. The Employer responded in a letter dated 24 January 2018 which ends

Mrs A was very dissatisfied with the Employer’s internal grievance process and its conclusion. On 6 February 2018, Mrs A began proceedings in the Employment Tribunal against the Employer and the Owner.

The hearing bundle included a letter dated 7 March 2018 from PD Tax Consultants to Mrs A providing “advice in relation to the proposed settlement structure”. It was a detailed letter of some ten pages. Its author covered the tax treatment of payments under settlement agreements but all the examples were predicated on there also being a termination of employment and discussed the tax treatment of a payment under section 401 ITEPA. The letter included the following advice about the drafting of such an agreement to strengthen the case that it did not fall within section 401 ITEPA:

The letter from PD Tax Consultants also included advice about the tax consequences of entering into a restrictive covenant:

When this letter was put to her by Mr Carey, Mrs A acknowledged that it referred to termination but did not accept that it referred to the Settlement Agreement. She said that a settlement agreement had not been proposed at that stage but that her lawyer had outlined and explored all potential options and outcomes including their tax consequences. Mrs A said that she did not consider leaving the Employer until her last conversation with the Owner some time in late April.

Mrs A told us that she was subject to a great deal of pressure, including from the Owner personally, to drop her case in the Employment Tribunal. Mrs A said that, on several occasions in the weeks leading up to her leaving, the Owner had offered to write her increasingly large personal cheques if she would withdraw the proceedings in the Employment Tribunal and maintain confidentiality but she had refused to deal with him on this basis.

On 11 April 2018, Mrs A filed amended grounds of complaint with the Employment Tribunal.

Mrs A’s last conversation with the Owner was at the end of April 2018. She also had a meeting with Ms C, Chief People Officer of the Employer. At that meeting, Mrs A told Ms C that she could not go on and had decided to leave the Employer. Mrs A said that until then she had fully intended to stay in the Employer but, in the face of the pressure to drop the proceedings, eventually realised that she had no choice but to leave her job for her health and sanity.

Immediately after that meeting, Mrs A called her lawyer and told her that she could not cope any more and would leave the Employer. Negotiations in relation to the Settlement Agreement began from that point, ie the end of April 2018.

There was no horse trading or lengthy negotiation about the amount payable under the Settlement Agreement. Mrs A said that it all happened very quickly. The Owner had raised the possibility of a payment of over £1 million. She said that it was agreed that the payment would be £1.1 million, ie £1,055,000 plus £45,000. Mrs A said that her solicitor just contacted her when necessary and she was not aware of any other figures being discussed.

On 11 May 2018, following negotiations, Mrs A, the Employer and the Owner entered into the Settlement Agreement. The construction of the Settlement Agreement is central to resolving the issues in this appeal so we set out its material provisions in some detail:

On 12 October 2018, Mrs A wrote to HMRC to request a refund of the income tax deducted from the Compensation Sum by the Employer in accordance with clause 4.5.3 of the Settlement Agreement. Mrs A wrote:

In her self-assessment tax return for the year ended 5 April 2019, Mrs A showed an overpayment of tax in the sum of £467,683.82.

On 5 January 2021, following an enquiry into Mrs A’s return, HMRC issued the closure notice which concluded that the Compensation Sum was taxable as a termination payment under section 401 ITEPA and reduced her claim for repayment of overpaid tax from £467,683.82 to £6,136.02. Mrs A appealed the closure notice to HMRC on 7 January 2021. HMRC confirmed the decision contained in the closure notice in a review conclusion letter dated 25 March 2021.

On 13 April 2021, Mrs A lodged a Notice of Appeal with the FTT against that closure notice on the ground that the Compensation Sum was not chargeable to tax.

ITEPA charges income tax on employment income which includes earnings and any amount treated as earnings.

Section 225 ITEPA is headed “Payments for restrictive undertakings” and materially provides:

Chapter 3 of Part 6 of ITEPA is headed ‘Payments and Benefits on Termination of Employment etc’ and includes section 401 ITEPA which, in so far as relevant, provides as follows:

Section 403(1) ITEPA creates the charge to tax on the payment or other benefit. It provides:

There was no dispute that the Compensation Sum fell within section 403 if it was a payment within section 401(1)(a).

Section 406(1) ITEPA allows for an exception for death or disability payments and benefits, and provides that:

The parties referred us to the following cases on the interpretation of section 401 ITEPA:

It is not necessary to discuss the cases in detail as each turns on its specific facts. As Henderson LJ observed in Moorthy CA at [49],

There are some comments in the cases, however, which provide useful guidance on the proper interpretation of section 401 and how the tribunal should approach cases in which its application is in issue.

As Henderson LJ held in Moorthy CA at [43], approving the comments of the UT in Moorthy UT on this point: “The relevant question is always whether there is ‘the necessary connection between the payment and the termination of employment’.” That is the only test, as Henderson LJ made clear in [46]:

He explained later in [48] that section 401 is widely drawn:

In summary, Mrs A’s case in relation to section 401 ITEPA is that the payment under the Settlement Agreement arose from the grievance procedure and her claim in the Employment Tribunal. Accordingly, the Compensation Sum was not received directly or indirectly in consideration or in consequence of, or otherwise in connection with the termination of her employment. Mrs A’s evidence was that she left her job voluntarily and was paid a sum to prevent her discussing her departure and the events leading up to it.

Mr Fink submitted that the Compensation Sum was extraneous to the rights and obligations of both employee and employer under the contract of employment. It was not paid to compensate Mrs A for anything relating to her contract of employment or for its termination. The Employer paid Mrs A the Monthly Compensation Sum which was the amount due for the notice period under the contract of employment. He said that Mrs A was not due any financial recompense other than for the notice period which was correctly charged to PAYE and NICs.

Mr Fink accepted, when it was put to him, that clause 4.5.3 of the Settlement Agreement states that Mrs A agrees that Compensation Sum falls within section 401 although he maintained that was not determinative.

Mr Fink contended that the Compensation Sum was paid to ensure that the Employment Tribunal case did not take place and to silence Mrs A so that the underlying issues never became public. In closing, he submitted that the amount of £1,055,000 was wholly related to the confidentiality and non-disclosure obligations in clauses 9, 11, 12, 15.1.7, 15.1.8 and 15.1.10 because, commercially, what the Owner wanted was to ensure the grievance, the ET claim and the Settlement Agreement were never made public. The size of the Compensation Sum reflected the damage that an appearance before an Employment Tribunal would have caused the Employer and the Owner. He accepted that the confidentiality and non-disclosure obligations were within the definition of “restrictive undertaking” in section 225(8) when read in isolation but argued that the definition should be qualified by adding the words “in connection with her current, future or past employment” from section 225(1) after “restrictive undertaking”. He further submitted that, as the confidentiality and non-disclosure obligations did not restrict her conduct or activities in relation to any employment, section 225 was not engaged.

In short, HMRC submitted that it is clear from the terms of the Settlement Agreement (see clauses 4.1.1 and 18.1) that the Tribunal Claim Compensation Sum of £45,000 was paid to settle the Employment Tribunal proceedings. They contended that clauses 4.1.2 and 4.5.3 show that the Employer paid the Compensation Sum to Mrs A to compensate her for the termination of her employment and to settle any prospective claims she had or may have against the Employer or the Owner relating to her employment or its termination. HMRC contended that the Compensation Sum was, at the very least, paid “otherwise in connection with” the termination of Mrs A’s employment.

HMRC contended that, where the parties agreed an explicit carve out for compensation for injury to feelings and aggravated damages in respect of the Employment Tribunal proceedings concerning the alleged pre-termination unlawful conduct and did not calculate the Compensation Sum by reference to any individual claims, it is not open to Mrs A or the FTT to do so retrospectively. Accordingly, the whole of the Compensation Sum (except for the first £30,000) is chargeable to tax.

If we accept that all or part of the Compensation Sum was paid in relation to the confidentiality and non-disclosure obligations rather than the termination of Mrs A’s employment then HMRC argue in the alternative that such payment is taxable under section 225.

HMRC’s primary case was that the Compensation Sum was taxable under section 401(1) and section 403(1) ITEPA and the parties both dealt with it first in their submissions. However, the logical approach is to consider first HMRC’s alternative argument that all or part of the Compensation Sum is chargeable as a payment for a restrictive undertaking in connection with current, future or past employment and taxable under section 225 ITEPA. The reason is that the charge to tax as earnings under section 225 ITEPA takes priority over the charge to tax as specific employment income under section 401 ITEPA because that section does not apply to payments that are otherwise chargeable to tax (see section 401(3)). If all of the Compensation Sum falls within section 225 ITEPA, it is wholly taxable under that provision and there is no need to consider whether section 401 applies. If, however, the Compensation Sum is not covered or not wholly covered by section 225 then it will be necessary to consider whether it is, wholly or partly, a payment otherwise connected with the termination of Mrs A’s employment and taxable under section 401 ITEPA.

In Statement of Practice SP 3/96, HMRC say that they do not regard undertakings in termination agreements to discontinue legal proceedings relating to the employment or reaffirming undertakings given as part of the original terms of the employment as having any chargeable value within section 225 and such payments therefore remain within section 401. If, however, a specific payment is made for an employee’s promise not to pursue claims, which is rare in practice, HMRC consider that the payment is not covered by Statement of Practice SP 3/96 and it will therefore be chargeable to tax under section 225(3). A Statement pf Practice is no more than that and does not have the force of law. Accordingly, we disregard Statement of Practice SP 3/96 in determining whether all or any part of the Compensation Sum falls within section 225.

At the hearing, Mr Fink submitted that the entire Compensation Sum was consideration for the confidentiality and non-disclosure obligations in clauses 9, 11, 12, 15.1.7, 15.1.8 and 15.1.10 of the Settlement Agreement. That might seem a surprising submission as it would appear to lead to the ineluctable conclusion that the whole amount received by Mrs A is chargeable to tax under section 225(3). However, Mr Fink contended that sections 225(1) and 225(8) should be read together and interpreted as applying only to undertakings which restrict an individual’s conduct or activities in connection with the individual’s current, future or past employment. The terms of the Settlement Agreement did not restrict Mrs A’s future employment in any way but merely required her not to disclose the facts and circumstances surrounding the grievance and the termination of her employment. Mr Fink submitted that, in such circumstances, the restrictions imposed on Mrs A were not a ‘restrictive undertaking’ within the scope of section 225. If Mr Fink is right then there is no charge to tax under section 225(3).

In relation to their alternative argument that section 225 applies, HMRC stated in their statement of case at paragraph 29 that the part of the Compensation Sum that related to Mrs A agreeing to keep matters confidential was chargeable to tax under section 225. At the hearing, Mr Carey submitted that an agreement not to pursue the Employment Tribunal claim amounts to a restrictive undertaking within the scope of section 225 and the Compensation Sum was paid in respect of that undertaking.

We begin by considering the meaning of ‘restrictive undertaking’ in section 225. We then consider whether the Settlement Agreement contains a restrictive undertaking within section 225 ITEPA. Finally, if there is a restrictive undertaking within section 225 in this case, we consider what was the consideration for the undertaking.

Section 225(1) provides that the section applies where an individual gives a restrictive undertaking in connection with the individual’s current, future or past employment. Section 225(8) defines ‘restrictive undertaking’ as an undertaking which restricts the individual’s conduct or activities, whether or not the undertaking is legally enforceable or is qualified. Mr Fink submitted that section 225(1) and 225(8) should be read together to the effect that section 225 only applies where an individual gives an undertaking which restricts their conduct or activities in connection with, ie in the course of, their current, future or past employment. We do not accept this reading of section 225. It seems to us that section 225(1) does not qualify the definition of ‘restrictive undertaking’ in section 225(8). Those provisions must be read as providing that an undertaking which restricts an individual’s conduct or activities, whether related to their employment or personal lives, which is given in connection with their current, future or past employment falls within section 225. We do not consider that a restrictive undertaking must relate to the individual’s conduct or activities in the course of their employment in order for it to fall within section 225. Any undertaking which restricts the individual’s conduct or activities and is given in connection with their employment is within the scope of the section.

Both parties agreed that the Settlement Agreement contained restrictive undertakings although they differed as to which clauses constituted the relevant restrictive undertaking or undertakings and, as discussed, Mr Fink contended that the relevant undertaking did not fall within section 225 (which we do not accept). There is no doubt that the Settlement Agreement imposes a number of restrictions on Mrs A’s conduct or activities. Such restrictions can be found in clauses 9, 11, 12, 15.1.3, 15.1.6, 15.1.7, 15.1.8, 15.1.10, 17.2 and 17.3. In summary, those clauses restrict Mrs A’s conduct or activities by:

It is therefore clear that, on our construction of section 225(1) and 225(8), Mrs A has given restrictive undertakings in connection with her employment by the Employer, eg clauses 9.2, 11.1, 12, 15.1.3, 15.1.6 and 17.2, and those undertakings are within the scope of section 225.

That leaves the question of what consideration, if any, was paid for the restrictive undertakings in the Settlement Agreement. The question, for the purposes of section 225, is what payment was made in respect of the giving of the undertaking or its fulfilment. Mr Fink contended that the whole of the Compensation Sum was consideration for the confidentiality and non-disclosure undertakings in the Settlement Agreement. HMRC submitted that the Compensation Sum was paid to Mrs A to settle any existing or future claims relating to her employment or its termination that she had or may have had against the Employer or the Owner.

Neither party suggested that the Settlement Agreement did not reflect the intention of the parties. It is clear from clause 18.1 that:

HMRC accept that the Tribunal Claim Compensation Sum was paid for injury to feelings and aggravated damages as a result of the alleged conduct which led to the grievance procedure and Employment Tribunal proceedings. HMRC also accept that the conduct was not connected to the termination of Mrs A’s employment and was correctly paid without deduction of tax because it does not fall within the scope of section 401 (as it was not a termination payment) or section 62 ITEPA (as it was not a payment based on financial loss arising from pre-termination unlawful conduct).

The Compensation Sum was not paid as damages. It was paid, as Mr Fink submitted, in respect of the restrictive undertaking given by Mrs A that she would not make or pursue any claims against the Employer and/or the Owner relating to or arising out of her employment or its termination. Accordingly, we find that the Compensation Sum is chargeable to tax as earnings from employment under section 225(3).

That conclusion is sufficient to determine this appeal but, in case we are wrong, we consider whether the payment was received by Mrs A ‘directly or indirectly in consideration or in consequence of, or otherwise in connection with’ the termination of her employment and is therefore chargeable to tax as employment income, to the extent that it exceeds £30,000, under section 403(1).

HMRC contend that the Compensation Sum was, at the very least, paid otherwise in connection with the termination of Mrs A’s employment. We agree with HMRC that the phrase “otherwise in connection with” set out in section 401(1) is extremely wide in scope (see Moorthy CA at [48] quoted in [44] above). The only question that determines whether section 401 applies is whether the payment was directly or indirectly in consideration or in consequence of or otherwise in connection with the termination of a person’s employment. Mr Carey cited the comments made by Judge Redston in Moorthy FTT:

We agree. We were also referred to the recent decision of the FTT (which included Mr Barrett who is a member of the panel in this case) in Mathur, which involved the application of section 401 ITEPA to facts similar, although not identical to those in this case.

The starting point is to consider the contractual position and then consider whether the contractual analysis is called into doubt by any relevant facts. In our view it is clear from the terms of the Settlement Agreement that the payment was, at the very least, in consequence of or otherwise connected with the termination of Mrs A’s employment. The preamble (called ‘Background’) to the Settlement Agreement states that it sets out the arrangements relating to, among other things, the termination of Mrs A’s employment. Clause 4.1.2 states explicitly that the Compensation Sum is paid as compensation for the termination of Mrs A’s employment. Clause 4.5.3 refers to the amount of the Compensation Sum in excess of £30,000 as taxable as a termination award.

There was no evidence to suggest that the position described in the Settlement Agreement was inconsistent with reality. Indeed, in answer to a question from Mr Carey, Mrs A agreed that Compensation Sum related in part to the termination of her employment although she maintained that it was primarily to avoid litigation and consequent bad publicity for the Employer and the Owner. We accept Mrs A’s evidence and find that the Compensation Sum was a payment that had more than one purpose. It was consideration for her undertaking not to say anything about the grievance and the Employment Tribunal proceedings but it was also related to the termination of her employment. It may be, as Mrs A said, that the Compensation Sum would not have been paid if she had not agreed to withdraw her claim in the Employment Tribunal and enter into the confidentiality and non-disclosure obligations. That, however, does not mean that the payment of the Compensation Sum was not received by Mrs A directly or indirectly in consequence of or otherwise in connection with the termination of her employment.

We accept that the payment of the Compensation Sum under the Settlement Agreement was, in part, consideration for Mrs A entering into the confidentiality and non-disclosure clauses in the Settlement Agreement. However, that additional purpose or effect does not mean that there was no connection with the termination of her employment. It seems to us that the contractual position is clear from the words of the Settlement Agreement and, looking at all the evidence in the round, there was a connection between the payment of the Compensation Sum and the termination of Mrs A’s employment. It follows that, if we are wrong to conclude that the Compensation Sum is chargeable to tax under section 225(3), the Compensation Sum (excluding the amount of £30,000 exempted by section 403(1)) falls to be taxed as Mrs A’s employment income under section 403.

We have considered whether the Compensation Sum could be apportioned between elements that relate to the termination of Mrs A’s employment by the Employer and other elements. In our view, that is not possible in this case. The Settlement Agreement already provides for apportionment between the Tribunal Claim Compensation Sum, the Compensation Sum and the Monthly Compensation Sum. The Compensation Sum is a single, undivided amount. The Settlement Agreement does not provide for any further apportionment of the Compensation Sum and there is no evidence on which such an apportionment could be made.

We are grateful to Mr Fink and Mr Carey for their clear and helpful submissions, both written and oral, of the issues in this case.

For the reasons given above, Mrs A’s appeal is dismissed.

This case was allocated to the Complex case category under rule 23 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (‘FTT Rules’). Rule 10(1)(c) of the FTT Rules provides that the Tribunal may make an order for costs in such proceedings on an application or of its own initiative. However, as she was entitled to do, Mrs A exercised her right under rule 10(1)(c)(ii) to request that the proceedings be excluded from potential liability for costs. Accordingly, the Tribunal may not make an order for costs under rule 10(1)(c) in this case.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.