---
title: "Can You Recover Legal Costs From HMRC If You Win?"
url: https://taxdisputes.co.uk/2026/10/can-you-recover-legal-costs-from-hmrc-if-you-win/
date: 2026-10-16
modified: 2026-10-16
lang: en
author: "Tax Dispute Solicitors"
description: "Winning your appeal at the First-tier Tribunal does not entitle you to your legal costs. Rule 10 of the Tax Chamber Rules 2009 provides that the Tribunal may only award costs on specified grounds, and succeeding in the appeal is not one of them. There are routes to recovery, and the most valuable of them is a decision you have to take within 28 days of a case management notice."
categories:
  - "First Tier Tax Tribunal"
  - "HMRC"
  - "Legal Insights Tax Law Dispute Resolution Tribunal Proceedings"
  - "Tax Investigation"
  - "Tax Issue"
  - "Tribunal Proceedings"
  - "Upper Tribunal"
tags:
  - "complex case costs opt out"
  - "detailed assessment"
  - "First-tier Tribunal costs"
  - "HMRC Tax Appeals"
  - "recover costs from HMRC"
  - "rule 10 Tax Chamber Rules"
  - "rule 23 categorisation"
  - "section 29 Tribunals Courts and Enforcement Act 2007"
  - "summary assessment"
  - "tax appeal costs"
  - "tax litigation solicitors London"
  - "tax tribunal costs"
  - "unreasonable conduct costs"
  - "Upper Tribunal costs"
  - "wasted costs order"
image: https://taxdisputes.co.uk/wp-content/uploads/2026/10/HMRC-COSTS-1024x576.jpg
word_count: 2271
---

# Can You Recover Legal Costs From HMRC If You Win?

**Winning your appeal at the First-tier Tribunal does not entitle you to your legal costs. Rule 10 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 provides that the Tribunal may only award costs on specified grounds, and succeeding in the appeal is not one of them. In most appeals each side bears its own costs whatever the outcome (Complex cases are the exception, covered below**).

There are three routes to recovery. One depends on a choice you must make within 28 days of the Tribunal telling you your case is Complex, long before anybody knows who will win. Doing nothing keeps you inside the costs regime, so you can recover costs if you win and may have to pay HMRC’s if you lose. Opting out removes both.

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## Why the Tax Tribunal Does Not Follow the Civil Courts

In ordinary civil litigation the unsuccessful party usually pays the winner's costs. The Tax Chamber works on a different basis. Rule 10(1) is an exhaustive list, so the Tribunal may award costs only where there has been a wasted costs situation under rule 10(1)(a), where a party or representative has acted unreasonably under rule 10(1)(b), or where the case has been allocated as Complex and the taxpayer has not opted out under rule 10(1)(c). A parallel provision in rule 10(1)(d) deals with MP expenses cases. Outside those grounds there is no power to order costs at all, however clearly the appeal was won. Our guidance on the [First-tier Tax Tribunal](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/) explains the position and notes that a taxpayer can opt out of the costs regime, and our [guide to the tribunal process and strategy](https://taxdisputes.co.uk/2025/09/tax-tribunal-process-guide-benefits-and-strategy-for-hmrc-tax-disputes-in-the-uk/) sets the appeal in context.

The policy behind this is access to justice. A taxpayer of modest means can appeal a penalty without the risk of paying HMRC's legal bill if the appeal fails, which would otherwise deter most appeals worth bringing. The cost of that protection is that a taxpayer who wins pays their own adviser. Anyone budgeting an appeal should price it on that basis from the start, alongside our material on [how First-tier Tribunal appeals run](https://taxdisputes.co.uk/2025/10/first-tier-tax-tribunal-appeals-guide/) and on [getting your evidence right at the tribunal](https://taxdisputes.co.uk/2026/08/witness-statements-in-hmrc-appeals-getting-your-evidence-right-at-the-tax-tribunal/), since the evidential work is where the fees accumulate.

## Complex Cases: The 28 Day Decision That Governs Everything

Rule 23(2) places every appeal into one of [four case categories](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/): Default Paper, Basic, Standard or Complex. Under rule 23(4) the Tribunal may allocate a case as Complex only where it considers that the case will require lengthy or complex evidence or a lengthy hearing, that it involves a complex or important principle or issue, or that it involves a large financial sum. Allocation as Complex is the gateway to costs recovery, because rule 10(1)(c) permits a costs order in a Complex case unless the taxpayer has made a written request to be excluded from the costs regime within 28 days of receiving notice of the allocation.

Read that provision carefully, because the default position catches people out. Silence keeps you inside the costs regime. A taxpayer who receives the allocation notice and does nothing remains exposed to an order to pay HMRC's costs if the appeal fails, while also retaining the right to claim costs if it succeeds. The decision is a commercial one about downside risk. A taxpayer with a strong case, a large sum at stake and the means to absorb an adverse order may prefer to stay in and keep the prospect of recovery. A taxpayer who could not survive paying HMRC's costs should opt out in writing and in good time, accepting that they will pay their own adviser even on a win. Our [guide to Upper Tribunal appeals](https://taxdisputes.co.uk/2026/01/upper-tribunal-appeals-strategic-2026-guide/) is worth reading at the same point, because an onward appeal changes the costs picture again, and our page on [funding](https://taxdisputes.co.uk/funding/) explains the options for meeting fees.

## Where HMRC Has Acted Unreasonably

Rule 10(1)(b) allows an order where the Tribunal considers that a party or their representative has acted unreasonably in bringing, defending or conducting the proceedings. This ground is available in any category of case, including Basic and Standard [appeals against HMRC decisions](https://taxdisputes.co.uk/hmrc-tax-appeals/) where no other costs route exists, which makes it the only realistic prospect of recovery for most taxpayers. The conduct itself has to be unreasonable. HMRC will argue that losing an appeal does not make its conduct unreasonable, and as a general proposition that argument is correct.

Our report on [a costs award against HMRC for unreasonable conduct](https://taxdisputes.co.uk/2024/07/tribunal-awards-costs-to-taxpayer-due-to-hmrcs-unreasonable-conduct/) shows where the line falls. In *Aftab Ahmed v HMRC* [2024] UKFTT 00236 (TC) the First-tier Tribunal granted the taxpayer's application under rule 10 and ordered HMRC to pay his costs of and incidental to the appeal, finding that HMRC's pursuit of its carelessness argument was unreasonable because the taxpayer had notified HMRC of the written off loans through his auditors. The case decides that HMRC maintaining a position which its own information contradicts can cross from weak to unreasonable, even though mere failure in the appeal would not. Our note on [HMRC being barred after breaching an unless order](https://taxdisputes.co.uk/2026/02/hmrc-barred-after-breaching-unless-order-carbon-six-engineering-ltd-v-hmrc/) shows the procedural end of the same spectrum.

Building this ground takes a contemporaneous record. The material that persuades a tribunal is the correspondence showing what HMRC was told and when, the dates on which it was asked to reconsider, and the point at which its position became untenable on information it already held. That record is assembled during the dispute, which means the decision to pursue costs has to be made while the appeal is running. Our guidance on [HMRC internal review and appeals](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) and on [what happens after a rejected review](https://taxdisputes.co.uk/2026/01/hmrc-rejected-review-what-happens-next/) covers the earlier stages where most of this evidence is created.

## Wasted Costs, Which Are Claimed Against a Representative

Rule 10(1)(a) allows a wasted costs order under section 29(4) of the Tribunals, Courts and Enforcement Act 2007, including the costs of applying for one. Section 29(5) defines wasted costs as costs incurred by a party as a result of any improper, unreasonable or negligent act or omission by a legal or other representative or their employee, or costs which, in the light of such an act or omission occurring after they were incurred, the Tribunal considers it unreasonable to expect that party to pay. Section 29(6) defines a legal or other representative as a person with a right of audience or a right to conduct the proceedings on a party's behalf. Taxpayers who suspect their own representation has gone wrong can ask for [a second opinion on how the appeal has been handled](https://taxdisputes.co.uk/second-opinion/).

This order is made against the representative rather than against the opposing party, so it is the route where your own adviser's conduct generated avoidable cost. Where the loss runs beyond wasted hearing costs into the tax itself, a wasted costs order is the wrong remedy and a negligence claim is the right one. Our pages on [negligent tax advice claims](https://taxdisputes.co.uk/professional-negligence-negligent-tax-advice-sue-accountant-claims/) and on [suing an adviser over bad HMRC advice](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) set out that route, and claims about the conduct of the litigation itself are covered in our guidance on [claims against a negligent solicitor or law firm](https://professionalnegligenceclaimsolicitors.co.uk/sue-negligent-solicitor-law-firm/).

## The Deadline That Ends Most Costs Claims

Rule 10(4) provides that an application for costs may be made at any time during the proceedings but no later than 28 days after the date on which the Tribunal sends a decision notice recording a decision which finally disposes of all issues in the proceedings, or a notice under rule 17(2) that a withdrawal has taken effect. The 28 days runs from the date the Tribunal sends the notice. Nothing in the rule extends it for a taxpayer who was waiting to see whether HMRC would appeal, or who assumed costs would be dealt with later, and the Tribunal's approach to [missed tax appeal deadlines](https://taxdisputes.co.uk/late-hmrc-tax-appeals/) shows how little latitude a late applicant can expect.

The application itself has formal requirements. Under rule 10(3) it must be sent in writing to the Tribunal and to the person against whom the order is sought, and it must be accompanied by a schedule of the costs claimed in sufficient detail to allow the Tribunal to carry out a summary assessment if it decides to do so. A costs application sent without that schedule, or sent on day 30, is the commonest way a sound entitlement is lost. The same discipline about deadlines applies throughout a tax dispute, as our guidance on [late appeals against HMRC](https://taxdisputes.co.uk/2026/09/late-appeals-against-hmrc-is-it-too-late/) explains.

## How the Amount Is Decided

Rule 10(5) prevents the Tribunal making an order against a paying person without first giving them an opportunity to make representations, and where the paying person is an individual the Tribunal must consider their financial means, which is one reason [representation on an HMRC tax appeal](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) should address means evidence before any order is made. Rule 10(6) then allows the amount to be fixed by summary assessment, by agreement between the paying and receiving parties on a specified sum, or by assessment of all or part of the costs including the costs of the assessment itself.

Where assessment is ordered, rule 10(7) sends the parties to a county court, the High Court or the Costs Office of the Supreme Court as the order specifies, with the Civil Procedure Rules 1998 applying with necessary modifications and the assessment carried out on the standard basis or, if the order so provides, the indemnity basis. Rule 10(7A) allows the Tribunal to order a payment on account before the costs are assessed, which matters where recovery is slow and the receiving party is out of pocket. Assessment has its own cost, so a modest claim is usually better settled by agreement than taken to a detailed assessment, and [our tax litigation solicitors](https://taxdisputes.co.uk/tax-solicitors/) will normally advise negotiating the figure where the sum in issue is small.

## What a Win Actually Delivers

A successful appeal cancels or reduces the assessment or penalty, and produces a repayment with interest where tax has already been paid. For most appellants that is the whole benefit, and the legal fees remain theirs. Taxpayers who paid the disputed tax to stop enforcement should read our guidance on [paying now and appealing later](https://taxdisputes.co.uk/2026/09/pay-now-appeal-later-disputed-hmrc-debts/), because the repayment position on a win is governed by its own rules. Where a penalty was the subject of the appeal, our page on [HMRC penalties](https://taxdisputes.co.uk/hmrc-penalties/) explains what falls away when the behaviour finding is overturned.

Where the irrecoverable fees are substantial, the question worth asking is why the dispute arose. An HMRC error that your own records contradicted may support a costs application for unreasonable conduct. An error by an accountant or tax agent that created the assessment points to a different remedy, covered in our material on [financial negligence claims](https://professionalnegligenceclaimsolicitors.co.uk/financial-negligence-claim-solicitor/). Where the dispute escalated to enforcement before it was resolved, the costs of defending that action form part of the picture, as our guidance on [HMRC enforcement becoming insolvency action](https://windinguppetitionsolicitors.co.uk/when-hmrc-enforcement-becomes-insolvency-action/) explains.

## Deciding the Costs Position Before You Appeal

Costs exposure is settled at the start of a tax appeal rather than at the end. The allocation notice arrives early, the 28 day opt out window is short, and the evidence for an unreasonable conduct application accumulates during the dispute rather than being assembled afterwards. A taxpayer who thinks about costs only after the decision has usually lost both routes. Before lodging an appeal it is worth testing whether the dispute can be resolved without a hearing at all, through [alternative dispute resolution with HMRC](https://taxdisputes.co.uk/2026/08/alternative-dispute-resolution-with-hmrc-explained/) or at the [internal review stage](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/), since a resolution reached there avoids the fees that are difficult to recover.

## How We Can Help

We advise on the costs position at the outset of a tax appeal and act on costs applications at its conclusion. That includes advising whether to opt out of the costs regime in a Complex case within the 28 day window, building and bringing [an application under rule 10(1)(b) where HMRC has acted unreasonably](https://taxdisputes.co.uk/2024/07/tribunal-awards-costs-to-taxpayer-due-to-hmrcs-unreasonable-conduct/), resisting an application made against a taxpayer, preparing the schedule of costs the rules require, and dealing with summary or detailed assessment. We cannot make the Tribunal award costs for a win alone, because the rules do not permit it, and we will say so at the first meeting rather than after the fees have been incurred. We do not offer free legal advice or legal aid, and we generally take on substantial matters.

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### Frequently Asked Questions (FAQs)

1. If I win my tax appeal, will HMRC pay my legal fees?

Usually not. Rule 10(1) of the Tax Chamber Rules 2009 lists the only grounds for a costs order, and winning is not among them, so each side normally bears its own costs.

2. What is the 28-day opt-out in a Complex case?

Where the Tribunal allocates a case as Complex under rule 23, rule 10(1)(c) lets either side claim costs unless the taxpayer asks in writing within 28 days of the allocation notice to be excluded. Doing nothing leaves you inside the regime and exposed to HMRC's costs.

3. Should I opt out of the costs regime?

It depends on whether you could absorb an order to pay HMRC's costs. Opting out removes that risk and removes your own right to recover, so the decision turns on the strength of the case and the sum in dispute.

4. Does HMRC losing the appeal count as unreasonable conduct?

Not by itself. Rule 10(1)(b) requires unreasonable conduct in bringing, defending or conducting the proceedings. In Aftab Ahmed v HMRC the Tribunal found HMRC unreasonable for pursuing a carelessness argument the taxpayer's own disclosure contradicted, which is different from simply losing.

5. How long do I have to apply for costs?

Rule 10(4) gives 28 days from the date the Tribunal sends the decision notice finally disposing of all issues. The application must go to the Tribunal and the paying party with a schedule of costs detailed enough for a summary assessment.