HMRC can issue Follower Notices where a tax avoidance scheme has been used and they consider that it is 
‘sufficiently similar’ to arrangements successfully defeated in the courts.
The Courts have recently found in HMRC’s favour in several different EBT arrangements.
There are a couple of important things to note about Follower Notices:
- It gives you 90 days to take corrective action
- There is no appeal process
- If corrective action (settlement) isn’t taken within 90 days HMRC can impose a penalty equal to 50% of the ‘denied tax advantage’
- Taking ‘corrective action’ essentially means ‘reach a settlement’.
HMRC have no moral obligation to calculate the lowest settlement figure possible for the taxpayer.
We know from the work that we have done with our clients that the settlement figure initially prepared by HMRC is rarely the final settlement figure.
We know that when more than one ‘taxing option’ exists – HMRC tend to apply the one that benefits them the most.
We know that many officers will not apply the available reliefs unless you specifically request them.
If you or your clients receive a Follower Notice, a letter warning them of an impending Follower Notice, or want to settle any outstanding tax arrangements, we strongly advise that you talk to us as soon as possible. Given the 90 day time limit and the draconian penalties, time is of the essence.
In our experience, the calculations prepared by HMRC are unlikely to be the most advantageous for your clients. Speak to us before approaching HMRC. Call us today on 0115 778 8533
