“How to set aside an HMRC follower notice” by Elliot Green FCA FABRP

Setting aside an HMRC follower notice led one taxpayer to the Supreme Court, writes Elliot Green.


Follower Notices were created by Part 4 of the Finance Act 2014. They were created as part of HMRC’s continuing attempt to meet the challenges of tax avoidance schemes. So how can you set aside an HMRC Follower Notice?


One way is for the taxpayer expeditiously to pay the tax that HMRC considers is due and owing. That will address the Follower Notice and enable consensual disposal of the matter.


However, what if the taxpayer disagrees with the HMRC Follower Notice and considers that the tax avoidance scheme is effective or that the notice itself is defective?


HMRC Follower Notices work on the basis that if there has been an existing final decision in the Tax Tribunal and if the scheme now being questioned is deemed by HMRC (subject to the requirements of the legislation) to follow the earlier one, then HMRC can issue such a notice in light of Section 204 of the Finance Act 2014. The effect of the notice is that HMRC can issue a penalty of up to 50% of the unpaid tax in question even if there is a dispute.

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