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...

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 face a penalty.

Consequently, if a follower notice is issued to a taxpayer, the taxpayer has a stark choice. The taxpayer can:

  1. concede to HMRC in the dispute and, depending on when the concession is made, avoid penalties, or

  2. pay a penalty of up to 50% of the tax in dispute and fight on

Depending on the circumstances, the taxpayer may be able to:

  1. make a claim for judicial review of

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