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How
unreasonable?
It's a frustrating fact that sometimes it isn't worth arguing, because winning will cost more than just giving in. Some people will fight on as a matter of principle, but they need to know the rules on cost recovery.
If you are appealing against a tax assessment, you may go before the Special Commissioners. If you win, you can apply for the Revenue to pay your costs (the fees of your accountants and lawyers who prepared and argued the case). Unfortunately, the Commissioners can only make the Revenue pay if they have acted "wholly unreasonably" in relation to the appeal. This means that they never had a proper case, and they knew it. This is so unlikely that it has only happened twice since the rule was introduced. In a recent case, the Commissioner said that the Revenue had acted fairly unreasonably, but that wasn't enough.
In a VAT appeal, you normally do receive an award of costs if you win, although even that may not be perfect. In another recent case, the taxpayers were successful, but Customs successfully argued that Customs should not have to pay the full hourly rates of the accountants - they were cut by about 25%. That means that the client is still out of pocket after winning, which is harsh.
Unfortunately, it's important to be realistic about the benefits of carrying on an argument with the authorities. They probably don't have to worry about the costs quite as directly as the individual - although it would be "wholly unreasonable" if they told you that they were taking advantage of this!
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