Nigel Alexander Moore v The Commissioners for HMRC
[2024] UKFTT 518 (TC)
Roy Baker v The Commissioners for HMRC
6 February 2024
[2024] UKFTT 126 (TC)
First-tier Tribunal
Mr. Baker didn't pay a tax bill on time because of confusion caused by the tax office making lots of mistakes. Even though he should have paid, the judge decided it was fair to cancel the extra charges because of the tax office's errors and the advice Mr. Baker received.
Key Facts
- •Roy Baker (RB) appealed HMRC's imposition of Follower Notice (FN) penalties under section 208 Finance Act 2014 (FA 2014) for failing to take corrective action.
- •The penalties stemmed from RB's participation in a tax avoidance scheme promoted by Montpelier Tax Consultants (Isle of Man) Ltd.
- •HMRC issued FNs and Accelerated Payment Notices (APNs), which were initially withdrawn due to errors and later reissued.
- •RB's representations disputed the FNs' validity and the inclusion of National Insurance Contributions (NICs) in the penalty calculation.
- •RB's appeal contended that the 42% penalty was excessive and that it was reasonable not to take corrective action due to HMRC's errors and the advice of Montpelier.
- •RB's appeal against closure notices was struck out due to Montpelier's inaction, a fact RB was unaware of until much later.
- •HMRC's review reduced the penalty from 50% to 42% to reflect RB's cooperation.
Legal Principles
Conditions for issuing a Follower Notice (FN) under section 204 FA 2014.
Finance Act 2014
Liability for FN penalties for failure to take corrective action under section 208(2) FA 2014.
Finance Act 2014
Penalty reduction for cooperation under section 210 FA 2014.
Finance Act 2014
Appeal against FN penalties under section 214 FA 2014, considering whether it was reasonable not to take corrective action.
Finance Act 2014
The meaning of 'cooperation' in the context of FN penalties, as interpreted in *Comtek* and *Bentley*.
Case law: *Comtek*, *Bentley*
Objective test of reasonableness in determining whether it was reasonable not to take corrective action, considering taxpayer's thought processes and circumstances, as set out in *Comtek*, *Perrin*, *Corrado*, *Onillon*.
Case law: *Comtek*, *Perrin*, *Corrado*, *Onillon*
Outcomes
Appeal allowed; penalties cancelled.
The Tribunal found that it was reasonable in all the circumstances for RB not to have taken corrective action due to HMRC's numerous errors, inconsistencies regarding NICs, and RB's reliance on Montpelier's advice. The Tribunal accepted that RB's failure to take corrective action was a deliberate and informed decision based on his understanding of the circumstances.