Follower Notice unlawfully issued

Follower Notice unlawfully issued

Fri 03 May 2019

Mazars on behalf of their client G Haworth have successfully persuaded the Court of Appeal that HMRC unlawfully issued a Follower Notice to their client (Link). We will shortly also be publishing a case note highlighting the legal and technical aspects of the case and background to the relevant legislation generally.

The Judges, in their Judgment handed down on 1 May 2019, unanimously agreed that HMRC has misdirected itself when concluding that the case of Smallwood v R&C Comrs [2010] EWCA Civ 778; [2010] STC 2045 permitted it to issue Follower Notices to clients who had undertaken similar, but importantly not the same tax planning. The Judges also agreed HMRC further misdirected itself in the circumstances and inferred that when deciding to approve a Follower Notice in Mr Haworth’s case, the Workflow Governance Group “was proceeding on the basis that likelihood was good enough, not asking itself whether principles/reasoning in Smallwood  would deny Mr Haworth the tax advantage.”

As such, the Follower and Accelerated Payment Notices given to the client were quashed.

On the issue of Follower Notices generally, Lord Justice Gross acknowledged the “draconian nature of these powers conferred on HMRC” and that they should therefore be carefully circumscribed “because of their impact on access to the courts and the rule of law”. He continued by stating that Lord Justice Newey’s interpretation of the relevant legislation “serves to confine the exercise of these powers to their proper sphere and in accordance with their true statutory purpose.”

The case has potentially a significant impact for other clients who participated in what HMRC calls Round the World tax planning and who received Follower Notices and decided not to challenge them resulting in HMRC closing its investigation on the basis that the tax planning was unsuccessful. It could also possibly have repercussions for other clients issued with Follower and Accelerated Payment Notices where the case relied upon may have been misunderstood and overstated by HMRC.

We would be happy to speak to any taxpayer who received a Follower Notice in these and/or or other circumstances. If you would like to discuss this further, please do not hesitate to contact Jon Claypole ( or 07799033089) or Ezra Dulberg (