Failure to take corrective action after a follower notice

The taxpayer had taken part in a failed tax avoidance scheme. HMRC issued a follower notice and an accelerated payment notice which it was agreed overstated the correct tax due.

The taxpayer instructed his adviser to settle his tax position. The accountant did so but the taxpayer did not return the form attached to the follower notice to indicate he would take corrective action.

HMRC issued a penalty and the taxpayer appealed.

The First-tier Tribunal decided that the taxpayer had failed to take corrective action as required. This was because neither he nor his adviser had specifically told HMRC that he had given up the tax advantage. The adviser and HMRC had agreed on the amount to be paid as an accelerated payment.

However the failure was reasonable. Both the accelerated payment notice and follower notice contained incorrect figures of tax due and this was accepted by all parties yet...