Worldpay UK Limited v The Commissioners for HMRC

A tribunal which permits a very late amendment need not immediately award the opposing party its costs. The costs decision remains a broad case-management discretion. It may properly be reserved where the eventual significance of disclosure, and the justification for the amendment, can better be assessed at the substantive hearing.

An appellate tribunal should intervene only for an error of principle, failure to consider a material matter, consideration of an immaterial matter, or a wholly wrong exercise of discretion. The fact that a hearing date was lost does not itself require an immediate costs award.

Worldpay UK Limited appealed against the First-tier Tribunal’s decision to reserve the costs of HMRC’s successful, very late application to amend its Statement of Case. The amendment introduced an alternative allegation of abuse of law under the Halifax principle and caused the listed substantive VAT hearing to be vacated.

Worldpay did not challenge the grant of permission to amend. It contended that the First-tier Tribunal should immediately have awarded its costs thrown away by the adjournment. HMRC contended that the costs issue could properly await the outcome of the substantive appeal.

The central issue was whether reserving costs until the conclusion of the First-tier Tribunal proceedings involved an error of law or a perverse exercise of case-management discretion.

1. Appeal dismissed. The First-tier Tribunal made a case-management decision to defer, rather than refuse, determination of Worldpay’s costs application. It was entitled to do so.

2. The governing appellate approach was that a costs discretion is wide. An appellate tribunal should interfere only where the lower tribunal erred in principle, omitted a material factor, considered an immaterial factor, or reached a wholly wrong result. The Upper Tribunal was required to assess the decision actually made, namely reservation of costs, rather than the immediate award Worldpay sought.

3. No principle required the First-tier Tribunal to decide the costs of a late amendment at the time permission was granted. Although prompt determination will often be preferable, the authorities recognised that another judge might reserve costs to the trial judge. Here, reservation allowed Worldpay to renew its argument after the substantive hearing that the recently disclosed material did not justify HMRC’s new Halifax case.

4. The loss of the hearing date did not compel an immediate costs order. The First-tier Tribunal had concluded that HMRC had acted reasonably in seeking and reviewing disclosure, and that both parties had allowed the matter to be listed before evidence was complete. Those conclusions did not oblige it to make no order for costs, but they supported its decision to leave the costs question open.

5. The Upper Tribunal also rejected the suggested general rule that a party bearing the burden of proving Halifax abuse must plead that case in its original Statement of Case. A party may properly amend after legitimate disclosure supplies a basis for an alternative case. The Tribunal did not determine what costs order should ultimately be made. Worldpay remained free to contend before the First-tier Tribunal that the prejudice caused by the lost hearing should be compensated in costs.

• Upper Tribunal (Tax and Chancery Chamber): In Worldpay UK Limited v The Commissioners for HMRC [2020] UKUT 290 (TCC), dismissed Worldpay’s appeal against the reservation of costs.
• First-tier Tribunal (Tax Chamber): On 5 June 2019, permitted HMRC’s late amendment to its Statement of Case, adjourned the listed substantive hearing, and reserved the costs of and occasioned by the amendment application until conclusion of the appeal.