Nature of corrective action after follower notice

The taxpayer appealed against four penalties issued by HMRC because he did not take corrective action by the specified time – April 2017 - after receiving follower notices (FA 2014 s 204). He took the action in June 2018. There was no dispute as to the validity of the notices or that the taxpayer had taken part in an avoidance scheme. He said the reason for the delay was because he had relied on the advice of his adviser at the time Montpelier. He had since appointed a new representative who appeared on the taxpayer’s behalf at the tribunal.

HMRC said the taxpayer’s reliance on Montpelier was not reasonable and he had not taken reasonable care in the circumstances.

The First-tier Tribunal agreed with HMRC that the taxpayer had not shown that he had acted reasonably in failing to take corrective action by the specified date. There was little...