The CIOT has responded to proposed changes to penalties for failing to take corrective action in response to receiving follower notices (FN) as a result of using avoidance schemes. Key points from the CIOT’s response include:
general agreement with the proposals in the consultation document, given that HMRC has not followed the House of Lords’ recommendations made in December 2018 to amend the FN rules to include a right of appeal to the tax tribunal or to abolish the FN penalty regime;
even with a reduction in the standard rate of penalty from 50% to 30%, it will still likely act as a disincentive for taxpayers who consider they have a strong case to continue with their appeal;
if the level of the standard FN penalty is reduced to 30%, the existing reduction available for cooperation which can reduce the penalty to 10% should be maintained; and
proposed alternative options which might help to achieve a better balance between the objective of FNs to discourage further litigation of points already settled, with the rights of taxpayers to continue a genuine dispute.
The CIOT has responded to proposed changes to penalties for failing to take corrective action in response to receiving follower notices (FN) as a result of using avoidance schemes. Key points from the CIOT’s response include:
general agreement with the proposals in the consultation document, given that HMRC has not followed the House of Lords’ recommendations made in December 2018 to amend the FN rules to include a right of appeal to the tax tribunal or to abolish the FN penalty regime;
even with a reduction in the standard rate of penalty from 50% to 30%, it will still likely act as a disincentive for taxpayers who consider they have a strong case to continue with their appeal;
if the level of the standard FN penalty is reduced to 30%, the existing reduction available for cooperation which can reduce the penalty to 10% should be maintained; and
proposed alternative options which might help to achieve a better balance between the objective of FNs to discourage further litigation of points already settled, with the rights of taxpayers to continue a genuine dispute.
