It doesn’t necessarily ‘follow’! by Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP, Editor and a co-author of HMRC Investigations Handbook

Mark McLaughlin looks at an important Supreme Court decision that should lessen the occasions on which HMRC issue follower notices to taxpayers.

Follower notices have become an important weapon in HMRC’s armoury since the relevant legislation was introduced in FA 2014, with the government’s intended aim of “…[changing] the economics of entering into tax avoidance schemes, and to change the behaviours of people and promoters in relation to tax avoidance.”

In broad terms, HMRC can give a follower notice to a person who has used an avoidance scheme that has been shown in another person’s litigation to be ineffective. The taxpayer faces a penalty of up to 30% of the tax and/or National Insurance contributions (NICs) in question if they do not amend their return or settle their dispute (plus an additional 20% broadly if the taxpayer or representative is found to have ‘acted unreasonably’ in bringing an appeal to the tribunal) (FA 2014, ss 208-208A).

However, if a follower notice is issued, it is important to check the notice for errors, and to ensure it complies with statutory requirements.

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