Follower notices

By Tolley

The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Follower notices
  • Introduction
  • Timeline for issue of a follower notice
  • Interaction with accelerated payment rules
  • Penalties


HMRC can issue ‘follower notices’ requiring taxpayers to ‘take corrective action’, ie amend their returns / claims or drop their appeals where both of the following conditions are satisfied:

  • there is an ongoing enquiry into a return or claim; an open appeal against an assessment, determination or closure notice issued by HMRC; or relevant NIC dispute
  • there is a final judgment (which includes a decision in the First-tier Tribunal which is not appealed) in a tax case which HMRC is of the opinion applies to the taxpayer's situation

FA 2014, ss 204-205

The penalties for failing to take corrective action following receipt of a notice can be as much as 50% of the tax and / or NIC at stake and will apply in addition to any other penalties due up to a maximum of 200% of the tax (higher maximum percentages apply where an offshore matter is involved). For more on offshore matters, see the Penalties for offshore matters guidance note (subscription sensitive).

FA 2014, ss 208-212

The taxpayer must decide whether he should either:

  • accept the follower notice, take the corrective action and pay the tax / NIC due (plus interest and penalties)
  • continue with the enquiry / litigation and appeal the penalty charged by HMRC for failing to take corrective action on receipt of a follower notice

If the taxpayer takes the second option he will have to pay not only the tax but also a penalty of up to 100% of the tax (higher if there is an offshore element involved) if he:

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