Follower notices and penalties: R Baker v HMRC [2024] UKFTT 126 (TC) (6 February 2024) is the second case in which the tribunal has allowed appeals against penalties under the follower notice regime arising from the taxpayer participating in a scheme marketed by Montpelier Tax Consultants involving the routing of earnings through Isle of Man trusts. The scheme was held to be ineffective in Huitson v HMRC [2015] UKFTT 448 (TC).
The taxpayer had failed to take corrective action as required under the follower notice rules so that he was liable to a penalty unless his failure was reasonable ‘in all the circumstances’. Taking into account multiple errors and delays by HMRC confusion about whether NICs should be included and his reliance on his adviser’s erroneous advice the FTT found that it was reasonable for him not to have taken the corrective action. Although the decision is highly...
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