Effect of the Locke and Haworth decisions on follower notices and accelerated payment notices

The follower notice (FN) and accelerated payment notice (APN) regimes were introduced by Finance Act 2014. The government indicated that the regimes were being introduced with the aim of changing the economics of litigating tax avoidance cases.

Broadly the APN regime enables HMRC to require that in direct tax avoidance cases the taxpayer pays the disputed tax in advance of any appeal to the First-tier Tribunal. The regime as a whole was considered in R (on the application of Rowe) v HMRC [2018] STC 462 (and a number of other similar challenges). The courts held that the APN regime achieves a simple rebalancing: in such cases it will be HMRC rather than the taxpayer who holds the tax pending resolution of the substantive dispute before the tribunal.

The FN regime goes much further. It enables HMRC to issue an FN warning...