UK Tax Flash: Dear HMRC, Have You Tried Checking Your Own Files?

In Sagar v HMRC [2026] UKFTT 1247 (TC), the First-tier Tribunal awarded costs against HMRC after it spent months demanding documents that were already sitting in its own records. Despite the taxpayer’s appeal, HMRC persisted.  

The Tribunal was unimpressed. It held that upon receiving a notice of appeal, HMRC is required to undertake a proper and rigorous review of the dispute, including its own records. Here, HMRC’s conduct was unreasonable in that HMRC was not only demanding documents already in its possession, but continued defending the proceedings on the basis that relevant evidence had not been provided when in fact it had.  

For a taxpayer a good paper trail of all documents provided to HMRC may prove very valuable, and where HMRC demands those materials despite an appeal being lodged, it will likely face an adverse costs order should it persist.