Whispering Smith Ltd v The Commissioners for HMRC

Whispering Smith Ltd v The Commissioners for HMRC

The Supreme Court decision in UBS is a relevant judicial ruling for the purposes of the follower notice regime as the principles and reasoning, when applied to the appellant's arrangements, would deny the asserted tax advantage; the appellant did not establish it was reasonable in all the circumstances not to take corrective action; however, the quality of co-operation merits a 40% reduction in penalty, reducing it to 34% of the denied advantage.

Parties
Appellant: Whispering Smith Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
23 May 2022
Procedural Posture
Tax Penalty Appeal / First Tier Tribunal Judgment
Outcome
Appeal against imposition of penalties dismissed; appeal against quantum allowed in part
Legal Topics
Follower Notice Penalties, Judicial Ruling Relevance, Mitigation of Penalties, Reasonableness of Non Compliance, Co Operation With HMRC
Tax Law Follower Notice Penalties Judicial Ruling Relevance Mitigation of Penalties Reasonableness of Non Compliance Co Operation With HMRC

Case Brief

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Parties

Whispering Smith Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Penalty Appeal / First Tier Tribunal Judgment

Legal Issues

  1. 1 Whether the Supreme Court decision in UBS is a relevant judicial ruling for the purposes of the follower notice regime under FA 2014
  2. 2 Whether it was reasonable in all the circumstances for the appellant not to take the necessary corrective action in response to the follower notice
  3. 3 What level of mitigation should be applied to the penalties for co-operation

Ratio Decidendi

The Supreme Court decision in UBS is a relevant judicial ruling for the purposes of the follower notice regime as the principles and reasoning, when applied to the appellant's arrangements, would deny the asserted tax advantage; the appellant did not establish it was reasonable in all the circumstances not to take corrective action; however, the quality of co-operation merits a 40% reduction in penalty, reducing it to 34% of the denied advantage.

Court Disposition

Appeal against imposition of penalties dismissed; appeal against quantum allowed in part

Orders

  • Penalty reduced to 34% of the denied advantage