Follower notices
Produced in partnership with Keith Gordon of Temple Tax Chambers
Follower notices

The following Tax practice note produced in partnership with Keith Gordon of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • Follower notices
  • Conditions for issuing a follower notice
  • Condition A
  • Relevant contributions dispute
  • Condition B
  • Tax advantage
  • Relevant tax
  • Tax arrangements
  • Condition C
  • Final ruling
  • More...

FORTHCOMING CHANGE: Finance Act 2021 will, with effect from Royal Assent, reduce the maximum level of a standard follower notice penalty to 30% (down from 50%), except for those who the tribunal decides acted unreasonably by continuing their litigation against HMRC’s decision, in which case a 20% penalty would be imposed in addition to the 30% penalty. For more information, see News Analysis: HMRC consultation on follower notices and penalties.

On 17 July 2014, the Finance Act 2014 (FA 2014) introduced the concept of a follower notice. It is a further weapon in HMRC’s armoury in its battle against tax avoidance.

The intention is for follower notices to apply to taxpayers who have used an avoidance scheme that has been shown to fail in another person’s litigation. Under the rules, a follower notice may be issued where there is a final judicial ruling (that either cannot be appealed or is too late to be appealed), and the principles in the ruling would deny the tax advantage claimed by the taxpayer. Provided there is an open HMRC enquiry into the taxpayer’s return (or claim) or the taxpayer has made an appeal (and that appeal is still live), a follower notice can be issued to the taxpayer that obliges the taxpayer to amend its return (or claim) or drop its appeal in accordance with the earlier ruling, or

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