Anyone with an open enquiry (or appeal) concerning a tax avoidance scheme may be issued with follower notices and accelerated payment notices under new legislation in Finance Act 2014. It is understood that 43,000 payment notices will be issued by HMRC (33,000 to individuals and 10,000 to corporates) and will cover about £7.1 billion of disputed tax. The vast majority of the notices will be issued over the course of 2014/15 and 2015/16.

By issuing a follower notice, HMRC are seeking to bring the enquiry to an end by requiring the taxpayer to make the necessary “corrective” amendments to his return (and pay the disputed tax) or face a penalty of 50% of the tax in dispute. Taxpayers will therefore have to consider matters carefully before deciding whether or not to capitulate and press on with litigation. If this applies to you please contact us straight away to consider what action to take.

Some lawyers have suggested that it may be possible to challenge a follower notice or an accelerated payment notice by way of an application for judicial review, to restrain HMRC from exceeding or abusing their powers under Article 6 European Court of Human Rights (right to a fair trial).

Experience shows that a significant number of taxpayers in the current environment do not wish to experience the hassle, expense and potential stress of litigation involving HMRC and will choose to settle by making the necessary amendments to their return, effectively bringing the enquiry to an end.