The Commissioners for HMRC v Michael Breen

On 8 February 2021, HMRC applied to the Tribunal for its costs incurred in respect of Mr Breen’s appeal which had been struck out (“the Application”). The Application was made pursuant to Rule 10(1)(b) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (as amended) ("the Rules") on the basis that Mr Breen had acted unreasonably in bringing and conducting the proceedings.

On 11 March 2021, counsel for Mr Breen lodged with the Tribunal representations in relation to the Application arguing that the Application should be dismissed because:

Thereafter the Application was stayed pending the outcome of Mr Breen’s application for reinstatement under Rule 8(5) of the Rules.

The Application has now been listed for hearing.

With the consent of the parties, the hearing was conducted by video link using TEAMS. Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.

The documents to which I was referred comprised a Bundle consisting of 496 pages, a Supplementary Authorities Bundle and Skeleton Arguments for both parties.

Late on the afternoon of Friday 12 September 2025, Mr Birkbeck had lodged with the Tribunal and HMRC an application to submit a 21 page medical report dated 16 February 2025.

At 16.45 on 16 September 2025, being the day before the hearing, Mr Birkbeck filed with the Tribunal an application for the hearing to be adjourned in order to enable Mr Breen to obtain further medical evidence and he enclosed an email narrating the type of evidence that it might be possible to obtain. In the alternative, given the lateness of the hour he intimated that he would make an oral application to that effect in the course of the hearing.

HMRC responded later that evening vigorously opposing the application.

In the event, during a brief adjournment, I was provided with documentation relating to that application (extending to 3 pages) from both parties.

On 16 September 2025, HMRC had made an application to rely on a further authority. That application was not opposed.

At an early stage in the hearing, in the interests of transparency, I explained that this is a specialist tribunal and that bespoke imaging, ie not through the NHS or on referral by a doctor, was not always considered to be the provision of a “medical report” but I told the parties about Windows on the Womb (Franchise) Ltd v HMRC [2020]UKFTT 201 (TC) where HMRC had lost and imaging was considered, in that case, to be a medical issue.

I also explained, again in the interests of transparency, that having been a Deputy District Judge in the Social Entitlement Chamber of the FTT for many years, I was well aware that a diagnosis did not necessarily mean that there would be any functional impairment; contemporaneous evidence would be needed. As Mr Bignell had argued in his objection, the evidence that had been produced was more than four years after any relevant event.

The medical report in question narrated the outcome of a “Comprehensive whole body scan” conducted in Los Angeles on 10 February 2025. The reason for the scan was described as “Being proactive”. The introductory narrative stated inter alia that it was “effective for vizualizations of solid lesions on (sic) the order of 1 cm or larger within the head…”. I say that because, although the report was 21 pages long, reliance was placed only on what related to the brain.

As far as the brain was concerned under the heading “FINAL IMPRESSIONS” it stated: “Multiple brain abnormalities including left thalamus lacunar infarct, mild generalized volume loss and mild small vessel ischemic changes”.

However, under the headings “FINDINGS” it stated that:

As can be seen, the “impression”, described at paragraph 15 above, that there were multiple brain abnormalities is overstated as these three findings were the only findings relating to the brain.

The email to which I refer at paragraph 8 was dated 4 September 2025 and was general in its terms. It described the respective roles of Neurologists and Neuropsychologists and stated that neuropsychological testing to produce a report to assist with Mr Breen’s issue with HMRC since 2017 could be arranged within approximately three months. It would involve reviewing notes provided by Mr Breen, taking a full history and measuring Mr Breen’s cognition and mood against scales. He would be asked questions around his behaviours on scales including feedback (which would be obtained in advance) from a relative or close friend.

After hearing argument from both parties, I pointed out that, even if I were minded to grant an adjournment in relation to obtaining further medical evidence, the inevitable consequence would be that I would award the costs of this hearing to HMRC.

I granted Mr Birkbeck an adjournment so that he could take instructions from Mr Breen who was attending the hearing by telephone from the UAE. Therefore, he could not give evidence himself in relation to the late application and the delay between February and September 2025.

On reconvening, Mr Birkbeck confirmed that the application for an adjournment was withdrawn. Mr Birkbeck confirmed that he still relied on the medical report for the reasons set out in his application dated 12 September 2025 and so it was admitted.

I will revert to the detail but Mr Breen’s application for reinstatement was successful and, on 29 March 2022, Judge Amanda Brown KC released a decision (“the Reinstatement Decision”). That Decision reinstated Mr Breen’s appeal which had been automatically struck out on 24 November 2020 following the failure to comply with an (unpublished) “Unless direction” given by Judge Jane Bailey (“the Unless Order”) and issued on 10 November 2020.

HMRC appealed the Reinstatement Decision.

On 16 October 2023, Judges Thomas Scott and Guy Brannan issued a decision with neutral citation [2023] UKUT 00252 (TCC) (“the UT Decision”) allowing HMRC’s appeal, setting aside the Reinstatement Decision and remaking the decision. That decision was to the effect that the application for reinstatement should have been refused and was refused; Mr Breen’s appeal remained struck out.

The factual background is complicated and relevant to the whole issue of costs.

At paragraphs 8 to 83 in the UT Decision the following facts were narrated:

“8.

The procedural history which underlies this appeal is quite involved. It is fully set out in the Unless Order and is summarised in the Reinstatement Decision. For the purposes of this appeal, and because both of these decisions are unpublished, we have described in greater detail than would usually be necessary the main features of the history, in order to set out the background to our decision.

9.

Mr Breen’s appeal concerned income tax assessments for the tax years from 1996/97 to 2011/12. Following a statutory review the amount of tax in dispute was £942,131.68. The assessments followed an HMRC investigation into Mr Breen’s tax affairs in 2012. In short, HMRC considered that Mr Breen was liable to tax on undeclared income and gains. Mr Breen’s contention was that there was no UK tax liability because he had an Irish domicile and because the relevant work giving rise to the disputed income had been undertaken outside the UK.

10.

In the Reinstatement Decision the FTT stated that the assessments mentioned above were issued under section 29 Taxes Management Act 1970 on the basis that Mr Breen had deliberately failed to bring relevant income into account in the relevant tax years. In the course of the hearing before us, Mr Stone pointed out, and we did not understand it to be in dispute, that some of the assessments (for the years ended 5 April 2009, 2010, 2011 and 2012) had been issued on the basis that Mr Breen had been careless in failing to bring his income into account.

11.

During HMRC’s investigation, Mr Breen had failed to comply with an information notice issued in 2014 resulting in penalties for non-compliance. Also in 2014, Mr Breen informed HMRC that much of the relevant documentation was no longer available.

12.

In 2016, Mr Breen failed to provide answers to HMRC’s questions about his family and background that were designed to clarify his domicile status. In other words, there was a history of non-compliance by Mr Breen in the course of the investigation.

13.

HMRC’s review decision was issued on 29 September 2017 and the deadline for appealing to the FTT was 29 October 2017.

Appeal to the FTT

14.

Mr Breen’s appeal was received by the FTT on 3 November 2017. Mr Breen said that he did not consider the tax assessed was due and indicated that he would “provide further detail/explanation once I have appointed a representative.”

15.

A resubmitted appeal was received by the FTT on 27 November 2017. The Appellant indicated that the appeal was not late because he had incorrectly understood the date from which the time for appealing ran. He also explained that he had been working in the United States for much of October 2017 and this had contributed to his delay in appealing.

FTT’s request for grounds of appeal

16.

The FTT acknowledged receipt of the late appeal and assigned it to proceed under the Standard Category. However, the FTT wrote to Mr Breen and requested that he provide the grounds for his appeal (as required by Rule 20 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009).

17.

On 19 January 2018, the FTT received a letter from Mr Breen dated 18 January 2018 in which he provided a further explanation of why his appeal was late.

18.

However, on 15 February, the FTT wrote to Mr Breen seeking clarification of the grounds on which he was appealing in order that HMRC could produce a Statement of Case. The FTT requested a reply within 14 days. That deadline expired on 1 March 2018. By an email dated 27 February 2018, Mr Breen sought a further 14 days to provide his grounds of appeal. He said that bad weather on 27 February 2018 had prevented him from attending a meeting with his adviser and that the meeting had been postponed to the following week. On 5 March 2018, the FTT emailed Mr Breen and HMRC to grant the requested extension of time.

19.

On 14 March 2018, Mr Breen emailed the FTT with his grounds of appeal. Those grounds were that at all material times Mr Breen was domiciled in Ireland and that the relevant services provided by Mr Breen (resulting in the funds in his Swiss bank account) were provided outside the UK.

HMRC’s Statement of Case

20.

On 18 May 2018, HMRC sought an extension of time to serve their Statement of Case. HMRC had not been sent an earlier direction to serve their Statement of Case and did not know of the fast approaching deadline. This extension of time was granted (and Mr Breen was copied in on this extension). The FTT noted that Mr Breen, in his notice of appeal, had requested correspondence by post, but that he had recently corresponded by email. The FTT therefore asked Mr Breen whether he would prefer correspondence by post, but no reply was received to that email.

21.

On 20 June 2018, HMRC sought a stay of the appeal to allow discussions to take place. The FTT extended the deadline for HMRC’s Statement of Case (copying both parties) to 12 October 2018 to permit those discussions. HMRC applied for a further extension on 20 September 2018 and on 11 October 2018 the FTT further extended the deadline to 13 December 2018 (informing HMRC by email and Mr Breen by post). On 26 November 2018, HMRC requested a further extension which was granted and both parties were informed in the same manner as before.

22.

The new deadline for HMRC to file their Statement of Case was 18 January 2019 but they filed the document with the FTT (and copied to Mr Breen) three days late on 21 January 2019.

23.

Next, on 16 February 2019, Mr Breen emailed the FTT stating:

“I write to request a 60 day extension to the date for filing of my Reply in answer to HMRC’s Statement of Case for the following reasons:

1.

I did not receive HMRC’s Statement of Case on the due date;

2.

I need time to source and instruct a firm of solicitors to represent me and such firm will in turn require time to source and instruct counsel; and

3.

I have been corresponding with HMRC in an attempt to see if we can agree on the narrowing of the matters in issue in order to save court time and costs.”

24.

HMRC emailed the FTT indicating that HMRC did not object to the extension requested by Mr Breen.

The Directions of 6 March 2019

25.

On 6 March 2019, the FTT issued directions to both parties. Direction 1 provided as follows:

“1.

List of documents: Not later than 19 April 2019 each party shall:

a.

send or deliver to the other party and the Tribunal a list of the documents in its possession or control which that party intends to rely upon or produce in connection with the appeal (“documents list”); and

b.

Send or deliver to the other party copies of any documents on that documents list which have not already been provided to the other party and confirm to the Tribunal that they have done so.”

26.

At the same time, the FTT sent Guidance Notes to Mr Breen which explained what was required in order to comply with the Directions.

HMRC’s application for an extension to the deadlines in Directions 1 to 4

27.

On 17 April 2019, HMRC applied for an extension of time to the deadline of 19 April 2019, confirming that the proposed extension had been suggested to Mr Breen but that he had not responded. Apparently, HMRC’s email to Mr Breen went into his spam email folder. The extension was granted by Judge Poole on 8 of May 2019 (and confirmation of this was posted to Mr Breen at the time).

28.

On 8 May 2019, Judge Poole agreed to HMRC’s application for an extension of the deadlines set out in the directions of 6 March 2019. This was communicated to Mr Breen by letter, which explicitly referred to HMRC’s application dated 17 April. Mr Breen did not contact the FTT to say that he had not received a copy of HMRC’s application. The fresh deadline for compliance with Direction 1 was 31 July 2019.

29.

On 4 June 2019, HMRC requested a re-categorisation of the appeal from Standard to Complex, setting out their reasons for the request. HMRC referred to having contacted Mr Breen on 21 May 2019 but without receiving a response. It appears that HMRC’s emails went into Mr Breen’s spam email folder.

HMRC’s application for re-categorisation of the appeal

30.

On 27 June 2019, the FTT wrote by letter to Mr Breen and asked him to provide his representations on HMRC’s application of 4 June 2019. On 16 July 2019, Mr Breen emailed the FTT (but did not copy HMRC) stating that he had received the letter of 27 June 2019 but had not received the email of 4 June 2019 from HMRC. Mr Breen explained that, as a result of a telephone call with HMRC, he had become aware of HMRC’s April 2019 application. Mr Breen would also have been aware of the April 2019 application from the terms of the FTT’s letter of 8 May 2019.

31.

On 31 July 2019, HMRC emailed the FTT with their list of documents and confirmed that the list had been served on Mr Breen on the same day. Apparently, HMRC’s list of documents was sent by post to Mr Breen.

32.

Mr Breen did not file his list of documents with the FTT by the 31 July 2019 deadline.

33.

On 16 August 2019, the FTT wrote by letter to Mr Breen enclosing a copy of HMRC’s applications of 17 April 2019 and 4 June 2019, requesting that Mr Breen make his representations on the applications within 14 days i.e. by 30 August 2019.

34.

On 23 September 2019, the FTT wrote again to Mr Breen, noting that there had been no response to their letter of 16 August and asking for a response within a further 14 days i.e. by 7 October 2019.

35.

On 7 October 2019, the FTT received a letter dated 2 October 2019 from Mr Breen which enclosed a copy of a letter dated 3 September 2019. This letter of 3 September 2019 contained a complaint by Mr Breen that HMRC did not have his permission to correspond by email and that the applications they made should have been sent by post. Mr Breen asked the FTT to direct that HMRC must correspond with him by first class post. Mr Breen stated that he would be flying to Ireland the next day to visit his mother and that he would be working abroad until 25 September. He asked for an extension of time until 31 October 2019 in order to take legal advice on HMRC’s application.

36.

In neither his 3 September 2019 letter nor his 2 October 2019 letter did Mr Breen refer to not having received the copy applications sent by the FTT on 16 August 2019. Mr Breen did also not refer to any reason for his own failure to provide his list of documents, nor did he request an extension of time to comply with Direction 1.

37.

The FTT wrote to Mr Breen (with a copy to HMRC, asking them to confirm that they would correspond with Mr Breen by post only) on 28 October 2019, granting his application for more time to respond.

38.

The FTT’s letter of 28 October 2019 did not reach Mr Breen by 30 October 2019 because, on that date, Mr Breen wrote to the FTT to complain that he did not know the extension that he had requested had been granted. He asked for “a reasonable period of time” to respond to “all matters raised by HMRC” and stated that he did not feel that he was in a position to say how long he would need to respond when he had not seen “all the matters raised by HMRC” in correspondence. This was despite the FTT having posted copies of both of HMRC’s applications to Mr Breen on 16 August 2019.

39.

On 26 November 2019, the FTT posted a letter to Mr Breen, drafted on the instructions of Judge Dean. Mr Breen was directed that the new deadline for him to provide his representations on HMRC’s application to re-categorise the appeal as a complex appeal was 9 December 2019. No response was received from Mr Breen by the expiry of the deadline and no explanation has been provided for his failure to comply with Judge Dean’s direction.

40.

There was further correspondence between Mr Breen and the FTT in December 2019. Mr Breen complained about HMRC’s use of email rather than post for communications and said that HMRC’s application for re-categorisation had not been enclosed with the FTT’s letter of 26 November. However, this was because a copy of this application had already been sent to the Appellant by letter on 16 August 2019. A further copy of HMRC’s re-categorisation application of 4 June 2019 was sent to Mr Breen by the FTT on 13 January 2020 and again on 24 January 2020, noting that Mr Breen’s response had been outstanding for six months, and directing that he provide his comments on that application by 7 February 2020.

41.

By a letter dated 6 February 2020 Mr Breen objected to the re-categorisation of the appeal, stating that although there was a significant amount of money at stake he considered the “facts relating to [the domicile of his father and himself] are very straightforward.” Mr Breen also stated “contrary to what HMRC claim domicile is not a particularly complex area of law.” In response to HMRC’s suggestion in their application that there were numerous documents, and possibly numerous witnesses, Mr Breen stated:

“The correct position is that there are not many documents involved in this matter and part of the reason for this is because it relates to matters that took place more than 20 years ago.”

42.

On 6 March 2020, the appeal was referred to Judge Bailey to decide HMRC’s re-categorisation application. Judge Bailey noted that there were fewer than 120 documents on HMRC’s list of documents and she agreed with Mr Breen that there was limited information concerning the number of witnesses. She also agreed with Mr Breen that appeals concerning domicile were lengthy rather than inherently complex. She therefore dismissed HMRC’s application.

43.

However, in reaching her decision on re-categorisation, Judge Bailey noted that HMRC had filed a list of documents but that no list of documents had been filed by Mr Breen. She noted the length of time which had elapsed since directions were originally issued and directed that Mr Breen’s list of documents should be filed no later than 27 March 2020 i.e. 21 days after the issue of her re-categorisation decision.

The pandemic

44.

On 23 March 2020, the UK went into lockdown as a result of the Covid-19 pandemic.

45.

On 31 March 2020, the FTT received a letter dated 26 March 2020 from Mr Breen. Mr Breen noted that he had not received HMRC’s list of documents and sought an extension of 12 weeks to provide his list of documents. Mr Breen stated that his daughter was vulnerable to Covid-19 and that he and his family were shielding. Consequently, he was unable to go to the post office to buy stamps or post letters. Mr Breen said that it had been his intention to obtain legal advice and to travel to Ireland “to obtain further information regarding the domicile point” but “this has simply not been possible”. Mr Breen asked for “leniency” with regard to deadlines and asked for a further 12 weeks to provide his list of documents. He also asked that he be granted further time if the period of lockdown was extended.

46.

Mr Breen, in this application, did not explain what action he had taken to prepare his list of documents between 6 March 2019 (when the FTT issued Directions) and 26 March 2020, nor did he explain why being unable to leave his home would prevent him from listing the “not many documents” which were in his possession or control and that were relevant to the appeal.

47.

In the Unless Order, Judge Bailey noted that Mr Breen did not explain why it had not been possible for him to take legal advice between 3 November 2017 and 26 March 2020, given that he has stated as long ago as 3 November 2017 that he would instruct a legal representative. Mr Breen also did not explain why he had not travelled to Ireland during this lengthy period to obtain the further domicile information, or (given that he had told the FTT he would be in Ireland in September 2019 to visit his mother) why he did not conduct his domicile research when he was in Ireland.

48.

Due to the pandemic, the FTT issued two general stays. These had the effect of extending all FTT deadlines by 14 weeks (two weeks longer than the extension Mr Breen had requested). Therefore the fresh deadline for Mr Breen to file his list of documents was 3 July 2020.

49.

The UK’s lockdown was largely lifted on 4 July 2020 (Footnote: ¹) and shielding for vulnerable individuals ceased on 1 August 2020.

50.

Next, on 2 September 2020, the FTT wrote to the parties on the instructions of Judge Popplewell. In this letter, Judge Popplewell noted that Mr Breen had not met the original deadline for providing his list of documents, that he had not provided his list of documents in the period since the expiry of the requested additional 12 weeks, and that the UK-wide lockdown imposed on 23 March 2020 had generally been lifted. Judge Popplewell expressed his opinion that the appeal was ready to be listed for hearing and he issued a number of Directions.

Judge Popplewell’s Directions

51.

The first of Judge Popplewell’s Directions was that Mr Breen should provide his list of documents no later than 15 September 2020.

52.

Judge Popplewell also directed both parties, within 14 days, i.e. by 16 September 2020, to provide the FTT and each other with the answers to five questions: (1) whether this appeal should be heard on the papers, (2) whether the appeal was urgent, (3) whether oral evidence would be given by the party replying, (4) an outline of the factual assertions made by the other party which the party replying did not agree, and (5) whether the appeal was suitable for a telephone or video hearing and, if not, why not. Judge Popplewell suspended compliance with the remainder of the Directions of 6 March 2019 pending compliance with his Directions of 2 September 2020.

53.

Mr Breen did not file and serve his list of documents by Judge Popplewell’s deadline of 15 September 2020.

54.

On 16 September 2020, HMRC complied with Judge Popplewell's directions, answering each of the five questions, and explaining that the absence of Mr Breen’s list of documents meant they could not give precise answers to the three questions regarding the bundles. HMRC noted that the absence of Mr Breen's list of documents also meant that they were unable to complete their witness statements as they did not know the case that they were required to meet and requested that the FTT either proceed on the basis that Mr Breen would produce no documents or that the FTT issue an “unless” Order.

55.

The FTT did not receive a response from Mr Breen to the listing information by 16 September 2020, and so there was no compliance with Judge Popplewell’s directions.

Judge Popplewell’s Decision – the First Unless Order

56.

On 25 September 2020, the FTT file was referred back to Judge Popplewell. Judge Popplewell noted that Mr Breen had not complied with either part of his Directions of 2 September 2020, and he issued an Unless Order (“the First Unless Order”). The terms of the First Unless Order were as follows:

“IT IS DIRECTED that the appellant having failed to comply with the Directions issued on 2 September 2020 to provide his list of documents and copies of those documents on which he intended to rely in this appeal in accordance with the Directions issued on 6 March 2019 and in particular Direction 1 of those Directions; and to provide information to the Tribunal to consider whether this matter should be decided on the papers, by telephone or at a video hearing, the Tribunal DIRECTS that UNLESS the appellant no later than 5 p.m. on 15 October 2020 complies with the aforesaid Directions to provide his list of documents and copies of those documents and provides the information requested by the Tribunal regarding the listing of this matter then these proceedings MAY be STRUCK OUT without further reference to the parties.”

57.

The First Unless Order was posted to Mr Breen on 25 September 2020.

58.

On 2 October 2020, the FTT received a letter from Mr Breen dated 29 September 2020 which was a late response to Judge Popplewell’s directions issued on 2 September 2020 and not a response to the Unless Order. In this letter Mr Breen reiterated that his daughter’s health condition, as well as his own, meant that they were both vulnerable to Covid-19. He asked for leniency with regard to the imposition of deadlines. Mr Breen also stated that he had wished to explore the possibility of legal representation and also to travel to Ireland, and he had not been able to do that during lockdown, or since. Mr Breen noted that he had received HMRC's list of documents but not the documents themselves, and asked the FTT to direct HMRC to provide a copy.

59.

In response to the questions in the 2 September 2020 letter, Mr Breen initially asked for more time to respond to the direction to provide listing information but, in case that additional time was not granted, stated as follows:

“I believe a paper or telephone or video hearing would not be appropriate or indeed satisfactory given the points and nature of the matters in contention. Accordingly, it is my position that there are a great number of very significant issues (both of fact and law) in dispute between the parties including but not limited to issues of witness evidence. It is my contention that the respondent’s witnesses should be subject to cross-examination in person. If this were not permitted then I believe I would be unfairly prejudiced as a direct result of the nature of the hearing. In short I am stating that I believe it is of vital importance given the matters in dispute that this hearing is an in person hearing.”

60.

As Judge Bailey later observed, Mr Breen did not state whether he would call oral evidence and did not outline the factual assertions made by HMRC that he did not accept. Judge Bailey accepted, however, that it was implicit that the Appellant did not consider his appeal to be urgent.

61.

In a letter dated 29 September 2020, Mr Breen stated that he was not in a position to provide his list of documents and so he could not respond in relation to the size of the bundles. Mr Breen asked for the directions to be suspended for a period of 12 weeks from the suspension of the first lockdown until it was safe for a high-risk individual to travel safely. Mr Breen asked the FTT to bear in mind the Convention for the Protection of Human Rights and fundamental freedoms, without specifying which particular rights he had in mind.

62.

Further letters were received by post from Mr Breen on 7, 21 and 27 October 2020. Mr Breen expressed concern about the consequences for himself and his daughter if he stopped shielding, and stated that he was asking for more time to seek legal representation as “the issues involved in this case are very complex and I feel I require expert legal advice and input in order that I may be given the opportunity of putting forward my best defence.” On 21 October 2020, the FTT received a letter dated 14 October 2020 in which Mr Breen complained that he had yet to receive a response to his 1 October 2020 letter and that he wished to receive a reply at the “Court’s earliest convenience.”

63.

HMRC emailed the FTT on 23 October 2020 to oppose Mr Breen’s request for a stay on the basis that it was effectively open-ended and in the light of the lack of progress over the previous three years it was unlikely that further delay would help in progressing the appeal.

64.

On 27 October 2020, Mr Breen complained about the FTT’s delay in responding to his previous letters and he considered that he had no option but to file a “draft list of documents”. He sought permission to add to this list once he had a legal representative and once he had obtained further documents. Mr Breen’s draft list of documents listed just four documents: his four Irish passports which spanned a period 1981 to 2022. He referred to his previous correspondence for the reasons why he wanted to be granted more time to obtain further documents.

65.

On 28 October 2020, HMRC emailed the FTT to oppose the suggestion that Mr Breen should be allowed to add to his list at a later date, pointing out that HMRC would be unable to complete their witness statements if there remained a risk of further material being produced at a later date.

The Unless Order

66.

As a result of Mr Breen’s failure to comply with Judge Popplewell’s First Unless Order, the matter came before Judge Bailey, who considered whether to strike out Mr Breen’s appeal. References in this section are to paragraphs of the Unless Order.

67.

Judge Bailey noted at [70] that there was an obligation on Mr Breen to progress his appeal in a reasonable manner and without undue delay. The judge noted that the original deadline for Mr Breen to produce his list of documents was 19 April 2019. The FTT had then extended this deadline to 31 July 2019. Judge Bailey considered that there had been no explanation whatsoever for Mr Breen’s failure to provide his list of documents by the extended 31 July 2019 deadline. Then at [71] Judge Bailey said:

“It is also helpful to reiterate what it was that was required of the Appellant in …Judge Popplewell’s Unless Order. There are two aspects. The more recent non-compliance was a result of the Appellant’s late and incomplete listing information in response to Judge Popplewell’s Directions of 2 September 2020. I will look at this aspect first. The more serious non-compliance, lasting for about 15 months, is the Appellant’s failure to file and serve his list of the documents.”

68.

Judge Bailey noted that there was no explanation provided as to why Mr Breen failed to comply with Judge Popplewell’s Directions of 2 September 2020 and that he should provide his listing information by 16 September 2020. Mr Breen had in his letter of 29 September 2020 belatedly provided responses to 3 of the 5 questions. However Mr Breen did not provide an outline of the factual assertions made by HMRC that he did not accept and he did not state whether he would call witnesses. Judge Bailey noted that Mr Breen had not answered the question whether he would be calling oral evidence and, if so, by whom. It was inconceivable, stated Judge Bailey, that Mr Breen should not know, by this stage, whether he would himself give evidence and whether he would call on anyone else as a witness.

69.

Judge Bailey then addressed what she considered to be “the more serious non-compliance” i.e. Mr Breen’s non-compliance with Direction 1 which required Mr Breen to file and serve a list of documents in his possession or control or on which he would rely at the hearing. Judge Bailey dismissed the various reasons for non-compliance. As regards Mr Breen’s wish to instruct a legal representative she noted that Mr Breen’s assertions about the complexity of the appeal were inconsistent and that Mr Breen was capable of recognising whether or not he needed representation at an earlier stage. Indeed, in Mr Breen’s notice of appeal he had stated that he intended to appoint a representative. Mr Breen had used lack of representation as an explanation for delayed compliance – an explanation which Judge Bailey rejected. There was no explanation as to why Mr Breen had not used the almost 2 ½ years between 3 November 2017 and 23 March 2020 (when lockdown began) to instruct a legal representative.

70.

Judge Bailey also rejected at [86] Mr Breen’s explanation that he was still shielding as an explanation for the delay in compliance. Furthermore, at [87] Judge Bailey rejected Mr Breen’s suggestion that he could not currently travel to Ireland in order to obtain further information from that country.

71.

At [89] Judge Bailey said:

“I am sorry to say that I am left with the strong impression that the Appellant has not given the progression of his appeal sufficient priority during the period 3 November 2017 to 23 March 2020. I can see that the Appellant responded (albeit after the Tribunal deadlines) when he realised he was not receiving emails from HMRC in the spring of 2019 but the Appellant has not complied with the Tribunal directions posted to him in March 2019 and he has not provided any explanation for not complying with Direction 1 on time. The explanations the Appellant has provided for his later non-compliance and for needing more time – that he was working abroad, that he was visiting family, that he had not yet instructed a representative – all indicate that the Appellant considered that these Tribunal proceedings could continue to be pushed back as being less important than other matters in his life. Unfortunately, the pandemic then struck. No one could have foreseen that this would occur, and it was no doubt a shock to the Appellant, as it was to everyone else. The Tribunal granted two general stays, totalling 14 weeks, to enable parties to adjust to their new circumstances and to work out how they could comply with Tribunal directions.”

72.

At [92]-[93] Judge Bailey set out her conclusion:

“92.

I now have to decide whether the Appellant’s non-compliance is sufficiently serious to justify striking out this appeal.

- In respect of the Appellant’s failure to provide the information required by Judge Popplewell, there was belated partial non-compliance and I do not consider that this non-compliance was sufficiently grave to justify striking out the appeal.

- In respect of the Appellant’s failure to provide his list of documents, given the length of the non-compliance and the Appellant’s continued failure to provide a definitive list, I consider that this non-compliance is sufficiently serious to justify striking out this appeal. However, given the Appellant’s extremely belated attempt at compliance on 27 October 2020, I have decided to give the Appellant [Mr Breen] one last chance to comply with the Directions previously issued.

93.

I stress to the Appellant that this is his last opportunity to produce his definitive list of documents and to provide the information required by Judge Popplewell. I am going to issue a further Unless Order but, unlike Judge Popplewell’s Order, this Order will take effect automatically if there is no compliance.”

73.

To emphasise the stark choice facing Mr Breen, Judge Bailey said at [96]:

“Therefore, the choice available to the Appellant now is as follows: he can comply with the Unless Order set out below, and his appeal will proceed, or he can choose not to comply, and the appeal will be struck out as a result of that non-compliance. I cannot state the position any more bluntly. I hope the Appellant will take this opportunity so that he can proceed with his appeal.”

74.

At [98] Judge Bailey gave the following directions:

“I DIRECT as follows:

UNLESS the Appellant, no later than 5 p.m. on the fourteenth day from the date of release of this decision, files with the Tribunal and serves on HMRC:

a)

a written final list of the documents in his possession or control which he intends to rely upon or produce in connection with the appeal,

b)

a document setting out the factual assertions made by HMRC in their Statement of Case with which the Appellant does not agree, and

c)

a document setting out whether the Appellant intends to call oral evidence at the hearing of this appeal and, if so, by whom,

THEN these proceedings WILL be STRUCK OUT without further reference to the parties.”

75.

In order that “there can be no confusion”, Judge Bailey inter alia made the following points clear at [99]:

“…

– It is the Appellant’s choice to use postal communications rather than email, and therefore it is his responsibility to ensure that he replies with sufficient time for the Tribunal and HMRC both to receive his response by the stated deadline. If no response is received by the deadline, the appeal will be struck out automatically. That will be the case even if a response was posted the day before but not received until the day after. If the Appellant chooses to use email on this occasion to ensure he meets the deadline then his email must be received by 5 p.m. on the fourteenth day.

…

– This is the Appellant’s last chance to respond. As the Appellant has already failed to comply with one Unless Order, no extensions of time will be granted to the deadline in this Unless Order. If the Appellant does not meet this deadline, the appeal will be struck out.”

76.

The Release Date of Judge Bailey’s decision was 10 November 2020.

77.

Mr Breen received Judge Bailey’s decision containing the above-mentioned Directions on 16 November 2020.

78.

Mr Breen served the documents specified in the Directions on 28 November 2020 i.e. four days after the date specified for compliance with the Directions.

79.

Consequently, Mr Breen had failed to comply with the terms of Judge Bailey’s Unless Order, with the result that the appeal was struck out on 24 November 2020.

80.

HMRC asked the FTT to confirm that the appeal had been struck out and by an email dated 3 December 2020 Mr Breen stated that he believed that he had complied with the terms of Judge Bailey’s Unless Order, having provided all the relevant documents to the FTT within 14 days of the receipt of the Unless Order. He pointed out that a further lockdown had been imposed and that he had continued to be unable to appoint legal representation.

81.

Mr Birkbeck was appointed on 28 December 2020 to represent Mr Breen.

82.

On 11 January 2021, Mr Breen was formally notified that the appeal had been struck out and of his right to apply for reinstatement.

83.

On 5 February 2021, Mr Breen made an in-time application for reinstatement of his appeal and filed a witness statement in support of his application.”

On 8 February 2021, the Application was filed with the Tribunal.

On 30 March 2021, the Tribunal wrote to the parties, as instructed by Judge Bailey, staying the Application until 28 days after the release of the Reinstatement Decision.

In its Disposition in the UT Decision at paragraphs 136 and 138 the Upper Tribunal found that:

“136.

…Mr Breen’s conduct of his appeal has demonstrated a long history of non-compliance. There can be no doubt that the non-compliance was both serious and significant. There were two unless orders with which he had failed to comply and there was a long history of previous non-compliance with the Tribunal’s requirements and requests. We have found that the continued non-compliance related not just to a list of documents but also to an outline of the factual assertions made by HMRC that he did not accept and to the witness evidence to be produced.

138.

…In other words, there was no good reason for the very lengthy failure…”.

There was no dispute about the legislative provisions relating to the Tribunal’s power to award costs which read:

“Section 29 of the Tribunals, Courts and Enforcement Act 2007 provides that all costs of and incidental to proceedings in the First-tier Tribunal shall be in the Tribunal’s discretion, subject to Tribunal Procedure Rules.

Insofar as relevant, Rule 10 of the Rules provides as follows:

Rule 2 of the Rules reads:

“2.—Overriding objective and parties’ obligations to co-operate with the Tribunal

(1)

The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly.

(2)

Dealing with a case fairly and justly includes—

(a)

dealing with the case in ways which are proportionate to the importance of the case, the complexity of the issues, the anticipated costs and the resources of the parties;

(b)

avoiding unnecessary formality and seeking flexibility in the proceedings;

(c)

ensuring, so far as practicable, that the parties are able to participate fully in the proceedings;

(d)

using any special expertise of the Tribunal effectively; and

(e)

avoiding delay, so far as compatible with proper consideration of the issues.

(3)

The Tribunal must seek to give effect to the overriding objective when it—

(a)

exercises any power under these Rules; or

(b)

interprets any rule or practice direction.

(4)

Parties must—

(a)

help the Tribunal to further the overriding objective; and

(b)

co-operate with the Tribunal generally.”

The parties were agreed that the approach to the application of Rule 10(1)(b) of the Rules is a three stage process, namely:

Mr Birkbeck confirmed that he agreed with the analysis of the jurisprudence on unreasonable conduct in Mr Bignell’s Skeleton Argument where, inter alia, he quoted from Judges Sinfield and Poole at paragraph 44 in Distinctive Care Limited v HMRC [2018] UKUT 0155 (TCC) (“DCL UT”).

That paragraph reads:

“How is conduct to be assessed?

44.

In Market & Opinion Research International Limited v HMRC [2015] UKUT 0012 (TCC) (“MORI”) at [22] and [23], the Upper Tribunal endorsed the approach set out by the FTT in that case to the question of whether a party had acted unreasonably. That approach could be summarised as follows:

(1)

the threshold implied by the words “acted unreasonably” is lower than the threshold of acting “wholly unreasonably” which had previously applied in relation to proceedings before the Special Commissioners;

(2)

it is possible for a single piece of conduct to amount to acting unreasonably;

(3)

actions include omissions;

(4)

a failure to undertake a rigorous review of the subject matter of the appeal when proceedings are commenced can amount to unreasonable conduct;

(5)

there is no single way of acting reasonably, there may well be a range of reasonable conduct;

(6)

the focus should be on the standard of handling the case (which we understand to refer to the proceedings before the FTT rather than to the wider dispute between the parties) rather than the quality of the original decision;

(7)

the fact that an argument fails before the FTT does not necessarily mean that the party running that argument was acting unreasonably in doing so; to reach that threshold, the party must generally persist in an argument in the face of an unbeatable argument to the contrary; and

(8)

the power to award costs under Rule 10 should not become a ‘backdoor method of costs shifting’”.

Mr Bignell then referred to paragraph 45 which reads:

“We would wish to add one small gloss to the above summary, namely that (as suggested by the FTT in Invicta Foods Limited v HMRC [2014] UKFTT 456 (TC) at [13]), questions of reasonableness should be assessed by reference to the facts and circumstances at the time or times of the acts (or omissions) in question, and not with the benefit of hindsight.”

At paragraph 46 the Upper Tribunal went on to state:

“46.

In assessing whether a party has acted unreasonably, this Tribunal in MORI went on to say this (at [49]):

‘It would not, we think, be helpful for us to attempt to provide a compendious test of reasonableness for this purpose. The application of an objective test of that nature is familiar to tribunals, particularly in the Tax Chamber. It involves a value judgment which will depend upon the particular facts and circumstances of each case. It requires the tribunal to consider what a reasonable person in the position of the party concerned would reasonably have done, or not done. That is an imprecise standard, but it is the standard set by the statutory framework under which the tribunal operates. It would not be right for this Tribunal to seek to apply any more precise test or to attempt to provide a judicial gloss on the plain words of the FTT rules.’”

I have quoted that paragraph because Mr Bignell had also quoted from paragraph 49 in MORI but had not included the last two sentences and I consider them to be relevant.

Lastly, in that context, Mr Bignell had cited Rose LJ, as she then was, in Distinctive Care Limited v HMRC [2019] EWCA Civ 1010 (“DCL AC”) at paragraph 19 where the Court of Appeal endorsed the description by the Upper Tribunal in Catanã v Revenue and Customs Commissioners [2012] UKUT 172 (TCC) (“Catanã”)of the phrase “bringing, defending or conducting the proceedings” as being:

“an inclusive phrase designed to capture cases in which an appellant has unreasonably brought an appeal which he should know could not succeed, a respondent has unreasonably resisted an obviously meritorious appeal, or either party has acted unreasonably in the course of the proceedings, for example by persistently failing to comply with the rules or directions to the prejudice of the other side”.

Both parties relied on paragraph 49 of MORI which is quoted at paragraph 37 above. That makes it explicit that the objective test of reasonableness involves a value judgment which depends on the particular facts and circumstances. As Mr Bignell pointed out, the Upper Tribunal in MORI went on tosay at paragraph 56 that the particular circumstances “will include the abilities and experience of the party in question”.

HMRC have argued that the appellant had been a partner in a firm of solicitors and had worked as a director in the sports and entertainment branch of a bank. He had also acted as manager for a world famous Formula 1 driver. None of that is denied. It was argued for Mr Breen that he had never been a litigator and had not practised law for a long time.

Mr Breen has not produced any evidence as to his activities in the period with which I am concerned. As can be seen from paragraph 35 of the UT Decision, in 2019 he was working abroad.

Mr Birkbeck conceded that Mr Breen had persistently failed to comply with the Rules and Directions and that that had caused prejudice to HMRC. However, in oral submissions he argued that Mr Breen’s behaviour was a demonstration of incompetence in conducting the appeal rather than unreasonable behaviour; both during the enquiry and the Tribunal proceedings he had been out of his depth and allegedly had not understood the processes. He was a litigant in person and should be granted some leeway.

In his Skeleton Argument he had argued that Judge Bailey, at paragraph 89 of her decision, had said that Mr Breen had ‘not given the progress of his appeal sufficient priority during the period 3 November 2017 to 23 March 2020’ and she had not made any finding of unreasonable conduct. He interpreted that as:

“That is to say: he did not choose to ignore the directions made in the appeal, he was simply too busy, disorganised or distracted to comply with them.

That is a failing, but it is not unreasonable conduct because it does not result from a decision of the Appellant to do (or not do) something”.

In oral submissions, Mr Birkbeck had referred to paragraph 48 of MORI in support of his argument that theTribunal had to make a value judgement on the facts. I agree with that. However, I agree with Mr Bignell that it does not assist him in relation to Mr Breen’s numerous failings over a long period of time. Paragraph 48 reads:

“48.

If something is not obvious or readily apparent, a person may nevertheless act unreasonably in not applying reasonable diligence, whether by applying their mind to the issue, or by making reasonable enquiries. On the other hand, if, viewed objectively, something would be obvious to the properly comparable reasonable observer, or the inferences to be drawn would be obvious to such an observer, a failure of a particular person not to appreciate that thing, or those inferences, is likely to be unreasonable”.

As can be seen from the UT Decision, the Directions and numerous letters issued by the Tribunal were neither complicated nor difficult to understand; indeed, at paragraphs 72 to 75 of the UT Decision, Judge Bailey’s reasoning and Directions make it absolutely obvious what the appellant required to do and yet he did not. That would indeed have been obvious to an observer. Further, paragraph 26 of the UT Decision states that Mr Breen was sent the Guidance Notes which explained what was required in order to comply with the Directions. Those Notes are written in plain English and are explicit.

I have narrated the detail of the medical evidence because it is argued that at the relevant time, Mr Breen’s cognitive functionality might have been impaired because of “long term brain damage”. I have added emphasis because it is a mere suggestion that that might have been the case. The UT Decision makes no reference to any such argument having been advanced previously, and no doubt it would have been if it would have helped with the reinstatement, or not, of the appeal given that the assessments in the appeal amounted to £942,131.68.

Mr Breen purchased the medical report in February 2025 approximately 16 months after the release of the UT Decision. He took no further action in relation to it until approximately two or three weeks before this hearing and, as can be seen from paragraph 18 above, he did so for the sole purpose of this hearing.

As I have indicated, HMRC have argued that the medical report is not relevant because it is four years after the event. I agree. There is nothing in that report which speaks to any cognitive problems in the period with which I am concerned. There is no contemporaneous evidence of any cognitive issues.

Had I been required to decide on the adjournment application, I would not have granted it as I am not persuaded that a report from a neuropsychologist along the lines described at paragraph 18 above would be of any assistance. As I have indicated, its sole purpose would be in relation to the Application and it would be measuring his self-described cognition and it would be many years after the event.

I am not persuaded that the appellant has established any cognitive deficit at the relevant time.

In fairness, Mr Birkbeck conceded that his argument that Judge Bailey had not categorised Mr Breen’s failings as being unreasonable behaviour was not the test for a strike out. It is not, and I would not have expected her to have thought it relevant to have commented on that. However, I observe that at paragraph 89 of her decision, Judge Bailey had stated that the “Appellant considered that these Tribunal proceedings could continue to be pushed back as being less important than other matters in his life.”

Furthermore, both Judge Brown in the Reinstatement Decision and Judges Scott and Brannan in the UT Decision did comment on Mr Breen’s conduct.

At paragraph 7 of the Reinstatement Decision, Judge Brown found as fact, that over a considerable period Mr Breen had failed to give proper attention to the conduct of his appeal.

“He provided no reason for not appointing legal representation before 5 February 2021 despite having indicated an intention to do so in 2017 and as such there was no reason other than apathy. In the period from 6 March 2019 to 16 November 2020, the appellant made no serious attempt to locate relevant documents which would support his position that he was not UK domiciled. There was nothing preventing him doing so and he provided no explanation for his conduct. As such, again, there was no reason for this conduct. The appellant was obstructive and almost belligerent with both HMRC and the Tribunal in his communications with them”.

At paragraph 30, Judge Brown concluded that “The Appellant’s conduct in this appeal has been abhorrent”.

In the UT Decision, the Upper Tribunal found that there were numerous failures and “In other words, there was no good reason for the very lengthy failure in those respects …”. I accept that that is not precisely the same as saying that his behaviour was unreasonable but, in my view, it certainly points in that direction. The UT Decision is indicative of a pattern of unreasonable conduct including during the enquiry which preceded the appeal.

I agree with Mr Bignell that Mr Breen persistently failed to comply with the Directions and Unless Orders of the Tribunal over a long period. Objectively considered, he was repeatedly and egregiously in breach of his obligations in terms of Rule 2 of the Rules. For all of these reasons I find that Mr Breen acted unreasonably in conducting the proceedings before the Tribunal.

I was not referred to the decision, but my starting point is the Upper Tribunal in Tarafdar v HMRC [2014] UKUT 0362 (TCC) at paragraph 20 which reads:

“20.

Even if the tribunal is satisfied that a party has acted unreasonably in the terms of rule 10, the tribunal nevertheless has a discretion whether or not to make a costs order, or as regards the extent of a costs order. Such a discretion, like any other discretion conferred on the tribunal, must be exercised judicially.”

HMRC relied on the unreported Upper Tribunal decision in HMRC andMattu (“Mattu”) which was produced for the purposes of this decision pursuantto section 18(2)(c) of the Commissioners for Revenue and Customs Act 2005. In that decision the Upper Tribunal was considering Rule 10(3)(d) of their Rules (which uses almost identical terminology to Rule 10(1)(b) of the Rules) and Judges Hetherington and Jones stated:

“19.

We reject each of Mr Jones QC’s arguments that HMRC have wrongly focussed on costs as being a punitive rather than compensatory measure and failed to prove any causative link between the unreasonable conduct and the incurring of costs. There is no requirement under Rule 10(3)(d) that there must be a direct causal connection between the costs claimed and the unreasonable conduct (and no authority for that proposition is provided by the Respondent).

20.

We are satisfied that the Rule 10(3)(d) costs claimed by HMRC are compensatory in that HMRC are not claiming costs over and above what they have reasonably incurred in the proceedings and, in principle, once unreasonable conduct has been identified, the Tribunal has a complete discretion under Rule 10(3)(d) in relation to costs subject to the overriding objective. In exercising that discretion, it is just and fair for an award of costs to be increased by reference to the nature and severity of the paying party’s conduct throughout the proceedings.”

I was not referred to the case of McPherson v BNP Paribas (London Branch) [2004] EWCA Civ 56 (“McPherson”) but it is well known and HMRC relied on paragraphs 138 and 139 in Ritchie v HMRC [2016] UKFTT 509 (TC) which included a quotation from paragraph 41 of McPherson but it was abbreviated.

Paragraphs 39-41 of McPherson are relevant to the extent of the Tribunal’s discretion and read:

“39.

Ms McCafferty submitted that her client’s liability for the costs was limited, as a matter of the construction of rule 14, by a requirement that the costs in issue were ‘attributable to’ specific instances of unreasonable conduct by him. She argued that the tribunal had misconstrued the rule and wrongly ordered payment of all the costs, irrespective of whether they were ‘attributable to’ the unreasonable conduct in question or not. The costs awarded should be caused by, or at least be proportionate to, the particular conduct which has been identified as unreasonable.

40.

In my judgement, rule 14(1) does not impose any such causal requirement in the exercise of the discretion. The principle of relevance means that the tribunal must have regard to the nature, gravity and effect of the unreasonable conduct as factors relevant to the exercise of the discretion, but that is not the same as requiring BNP Paribas to prove that specific unreasonable conduct by Mr McPherson caused particular costs to be incurred….

41.

In a related submission Ms McCafferty argued that the discretion could not be properly exercised to punish Mr McPherson for unreasonable conduct. That is undoubtedly correct, if it means that the indemnity principle must apply to the award of costs. It is not, however, punitive and impermissible for a tribunal to order costs without confining them to the costs attributable to the unreasonable conduct. As I have explained, the unreasonable conduct is a precondition of the existence of the power to order costs and it is also a relevant factor to be taken in to account in deciding whether to make an order for costs and the form of the order.”

As I have indicated at paragraph 57 above, Mr Breen’s conduct was unreasonable so the threshold for an order in respect of costs under Rule 10(1)(b) of the Rules is met. In considering whether to make an order and, if so, how to exercise my discretion to make an order for costs I have had regard to the overriding objective in Rule 2 of the Rules to deal with cases fairly and justly.

It was rightly accepted for Mr Breen that one of the purposes of Rule 10 of the Rules was to take out of the “no costs” regime those who, as Judge Bishopp indicated at paragraph 14 of Catanã (see paragraph 39 above), persistently failed to comply with the Rules and with Directions and that Mr Breen fitted into that category.

However, it was argued for Mr Breen that the Tribunal should not exercise its discretion to award costs since:

The Tribunal’s decision to strike out the appeal is quite separate to the question of costs, albeit it is the same behaviour that underpins both. Undoubtedly a strike out is a sanction, and a draconian one. The point is that an award of costs is compensatory as paragraph 19 of Mattu makes clear. The costs regime is not punitive.

Firstly, I do not accept the suggestion that, in making the Application, effectively, HMRC were arguing “that costs should be awarded against any party who has their case struck out”.

It was the extent of Mr Breen’s non-compliance both during the enquiry investigation (see paragraph 12 of the UT Decision) and during the appeal litigation that drove HMRC to seek costs in this instance. HMRC do not seek costs relating to the enquiry; I simply emphasise the extent of the non-cooperation.

The first version of the appeal was lodged with the Tribunal on 3 November 2017 (paragraphs 14 and 15 of the UT Decision). By the time that the appeal was automatically struck out on 24 November 2020, ie three years later, there had been very little progress. As a result of Mr Breen’s failures, HMRC had been unable even to complete their witness statements; the detail of Mr Breen’s case was largely unknown and it was not known whether he or any other witnesses would be giving evidence. He had failed to file and serve his list of documents.

There has been no real co-operation at any stage and the late application for an adjournment of this hearing simply reinforces the argument that, throughout, Mr Breen’s behaviour has been unreasonable.

Secondly, if Mr Birkbeck were to be right in that argument the converse is that an appellant could not seek costs if HMRC were to be barred and HMRC could never seek costs if an appeal is struck out. That is simply not a tenable argument.

I also do not accept the ingenious argument that because the appeal had been struck out and they had not had to litigate Mr Breen’s behaviour had been “a boon for HMRC, costs wise, rather than a cause of loss”. It is true that they did not have to litigate further but they had been forced to devote resources to litigate fruitlessly for three years.

Lastly, Mr Birkbeck argued that it is relevant to the exercise of the Tribunal’s discretion that, in a situation where the costs are sought in relation to the appellant’s failure to comply with Directions, HMRC’s failures in that regard should also be considered.

He went on to argue that, as could be seen from four paragraphs in Judge Bailey’s decision (the relevant paragraphs in the UT Decision are paragraphs 20, 21, 22 and 27):

“HMRC were forced to make numerous applications to extend deadlines. Whilst this does not necessarily make their behaviour comparable, it does suggest that the severity of any costs sanction should be limited.”

I do not accept that. As paragraph 20 narrates, the extension of time was sought because HMRC had not been sent a copy of the directions; that is not their fault. The extensions of time described in paragraph 21 were because there were settlement discussions; again there is no culpability. It is true that the Statement of Case was filed three days late but I point out that the due date for filing was 5pm on Friday 18 January 2019 and the Statement of Case was filed on Monday, 21 January 2019; there is no discernible prejudice to the appellant in that very minor delay. The final extension of time, narrated in paragraph 27, was granted by Judge Poole in the absence of any objection by the appellant. I do not know the reason but it was a judicial decision to grant the extension. It is certainly not comparable in any way with Mr Breen’s behaviour. I agree with Judge Brown that his behaviour was abhorrent and I find that that is relevant to paragraph 20 of Mattu.

I find that HMRC are most certainly not guilty of the same types of failings as Mr Breen.

The nature and severity of Mr Breen’s conduct is such that I have decided that it is appropriate to make an order for costs.

The issue then is the quantum.

Mr Birkbeck’s argument was that if costs are to be awarded then those costs should be restricted to costs that could be considered to be “consequent” on Mr Breen’s behaviour, ie there had to be a direct causal link; any greater award would be punitive and not compensatory. He quantified those costs at £4,430 (originally £5,640.83).

Mr Bignell had fairly pointed out two FTT decisions which were potentially in conflict and which discussed whether or not there required to be a causal link between the costs sought and the unreasonable behaviour. Those were Judge Zaman at paragraphs 79 and 80 in Shinelock v HMRC [2021] UKFTT 318 (TC) and Judge Vos at paragraphs 138 and 139 in Ritchie. Both are FTT decisions and thus not binding on this Tribunal. To the extent that they might be in conflict, he relied upon paragraphs 19 and 20 of Mattu (see paragraph 59 above).

In summary, Judge Zaman decided that, as far as Rule 10(1)(b) of the Rules was concerned, there need be no causal link between the costs claimed and the unreasonable conduct albeit she accepted that “this can be one factor to which I have regard when exercising my discretion”.

Judge Vos decided that there must be some link between the unreasonable behaviour and the costs incurred. That view was predicated on an incomplete quote from Mummery LJ at paragraph 41 in McPherson. He quoted only the third sentence of that paragraph and omitted the words “not however punitive and”. That is one of the reasons that I have quoted that paragraph in full, and in context, at paragraph 61 above.

Mr Birkbeck relied upon paragraphs 23, 27 and 28 of Mattu which read:

“23.

HMRC did not seek all of their costs but only sought a small proportion to reflect the additional costs arising from the Respondent’s unreasonable conduct and such an amount as would represent an appropriate sanction for the Respondent’s conduct.

27.

We accept HMRC’s submission that it would not be practical or necessary to seek to identify the precise costs that flowed from the Respondent’s conduct, and neither would that approach be in accordance with the overriding objective. What must be achieved is a fair and just outcome and this should be arrived at by means of a costs order that reflects the Respondent’s conduct and that of his representatives.

28.

Taking all of the relevant circumstances into account, in particular the Respondent’s unreasonable conduct and non-compliance throughout the proceedings, HMRC submit that a fair outcome would be for the Tribunal to award HMRC £5,000, being slightly less than 10% of their total costs incurred in the proceedings (which are £50,114.50). The Tribunal considers this to be fair and just in the circumstances.”

Mr Birkbeck argued that costs were an additional sanction and so only costs consequent upon Mr Breen’s behaviour should be awarded, that is to say that there should be a causal link between each element in the Application and the unreasonable behaviour. Hence the Schedule that he had produced as an annex to his Skeleton Argument had identified a maximum costs award of £5,640.83. In oral argument he reduced that further arguing that £1,568 (£980 plus £568.40 and £19.50 on 3, 4 and 9 December 2020 respectively being 7.9 hours) was an excessive cost.

Dealing firstly with the excessive cost issue, on 3 December 2020 Mr Breen sent a detailed email both to HMRC and the Tribunal. As can be seen from paragraph 78 of the UT Decision, he had failed to comply with Judge Bailey’s Directions and the appeal had been struck out on 24 November 2020.

His email commenced by arguing that HMRC had adopted “the most aggressive position possible” towards him saying that he understood why taxpayers had felt suicidal in the face of HMRC’s aggressive and unreasonable approach; he felt “overwhelmed” and was shielding. He made a number of other assertions including suggesting that HMRC had breached listing directions and that “natural justice” should be given priority so he should now be given the opportunity to instruct legal representation.

The description for the £980 was “Consider case files: Customer circumstances; seek guidance; way forward to reach decision”. On balance, I find it not only unsurprising but wholly appropriate that, in the context of references to suicide and allegations of aggressive behaviour, HMRC took advice on how to proceed. The description for the £568.40 was the mirror image of that since, having obtained advice, in the light of that, 2.9 hours were expended on “Consider case files; draft email to Client: advice (sic) way forward”.

Since the advice was to draft the Application that was a sensitive matter in the circumstances. The £19.80 was 0.1 of an hour to send the client an update five days later.

In those circumstances, I do not consider the £1,568 to be excessive.

In essence, Mr Birkbeck’s argument on a “sanction” is very similar to that advanced in paragraph 39 of McPherson ie that costs are punitive and that was emphatically rejected by Mummery LJ in paragraph 40 (see paragraph 59 above).

Whilst I accept that in Mattu HMRC sought only to recover part of their costs and those costs were restricted to particular instances of unreasonable behaviour that does not mean that this Tribunal should fetter its discretion. Firstly, and obviously, HMRC have not restricted the scope of their application for costs in this instance. Secondly, as always, those three paragraphs in Mattu mustbe read in context.

Obviously there must be a causal link in that the costs award is predicated upon Mr Breen’s unreasonable conduct, however, the extent of the award is quite another matter. Indeed, I observe that paragraph 27 of Mattu, upon which Mr Birkbeck had relied upon (for the second sentence), makes it clear that the approach advocated by Mr Birkbeck should not be adopted. More pertinently, paragraph 19 of Mattu is unequivocal in its terms: there is no requirement for a direct causal link.

I agree with Judge Zaman that there is no requirement that there should be a causal link between the conduct and each element of the costs sought, but it is one of the factors to be taken into account when making an order for costs. Paragraph 20 of Mattu comes into play at that point; it is just and fair for an award of costs to be increased by reference to the nature and severity of Mr Breen’s conduct.

As I have indicated, like Judge Brown, I find Mr Breen’s behaviour to have been abhorrent. It was his appeal and he did exceptionally little to progress it. Having said in his Notice of Appeal that he would be instructing legal representation, it was only three years later, when the appeal had been struck out that he finally appointed representation yet he competently opposed HMRC’s application to recategorise the appeal. As Judge Bailey found, he prioritised other matters; I find that he engaged only when it suited him.

Rule 2 of the Rules requires that the Tribunal should be fair and just to both parties. Mr Breen has been given numerous opportunities to make matters good but simply did not do so and over a long period of time. I agree with Mr Bignell that the level of non-compliance in this appeal is very unusual. HMRC have been forced to litigate for years to no avail.

They are entitled to all of the costs sought.

The only remaining issue is Rule 10(5) of the Rules. Mr Breen has been represented by Counsel since before the Application was filed. He has provided no evidence about his means. Mr Bignell argued that he had been asked about his means on 6 November 2024 but no reply had been traced.

I am not prepared to accept Mr Birkbeck’s unsupported assertion that given the size of the tax bill in the appeal Mr Breen might face bankruptcy.

I know that the funds traced by HMRC were in Swiss bank accounts. I know that in 2024, Mr Breen could afford to go to Los Angeles to purchase an MRI and as at the date of the hearing he was in the UAE. The simple fact is that I have no evidence. He could have given instructions on this issue to Mr Birkbeck, even in the course of the hearing when the issue of his means was canvassed, but he did not.

In terms of Rule 10(5) of the Rules he had the opportunity to make representations and I have certainly considered his financial means. In the absence of any evidence I find that on the balance of probability he does have the means to compensate HMRC.

For all these reasons the Application is granted.

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.