In Lee v Revenue Commissioners, the Court of Appeal delivered an important judgment on the jurisdiction of the Tax Appeal Commission (“TAC”) in tax disputes. In a recent follow on costs judgment, the Court once again offered a number of instructive comments on the TAC’s jurisdiction, while noting the potential consequences for taxpayers that fail to choose the correct venue for a tax dispute.
In this recent judgment, the Court held that notwithstanding that Revenue had been successful in Lee, it would not make a costs order against the taxpayer. While there is a presumption that a taxpayer must bear litigation costs following defeat in court, considerations such as the public and systemic importance of the case can operate to rebut this presumption.
Tax Cases of Public and Systemic Importance
As outlined in a recent Matheson update the general rule that litigation costs follow the event can be displaced, in certain circumstances. In Lee, the Court noted that the reasonableness of the taxpayer’s decision to take the proceedings before the TAC, rather than pursue judicial proceedings, was not itself sufficient to displace the general rule on costs.
Instead, the Court focused on a number of cumulative features of the taxpayer’s case, with a particular focus on the respective jurisdiction of the TAC and the courts, to find that a costs order should not be made against the taxpayer, including: