Andreae v Revenue and Customs (INCOME TAX - Follower Notice - Penalty) [2022] UKFTT 142 (TC) (21 April 2022)

Andreae v Revenue and Customs (INCOME TAX - Follower Notice - Penalty) [2022] UKFTT 142 (TC) (21 April 2022)

The appellant's failure to take corrective action was reasonable in all the circumstances because he reasonably relied on professional advice from Montpelier, had no reason to doubt their expertise until January 2018, acted promptly upon realising the need for a second opinion, and genuinely believed there was no final judicial ruling at the relevant time. The Tribunal found his conduct objectively reasonable given his knowledge, experience, and the conflicting information from HMRC and his advisers.

Citation
[2022] UKFTT 142 (TC)
Parties
Appellant: David Andreae; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
21 April 2022
Procedural Posture
Income Tax Appeal (follower Notice Penalty) / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal allowed; penalty cancelled.
Legal Topics
Income Tax, Follower Notice, Penalty, Reasonable Excuse, Corrective Action, Finance Act 2014
Tax Law Income Tax Follower Notice Penalty Reasonable Excuse Corrective Action Finance Act 2014

Case Brief

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Parties

David Andreae

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal (follower Notice Penalty) / First Tier Tribunal (tax Chamber) Substantive Decision

Legal Issues

  1. 1 Whether the appellant's failure to take corrective action in response to Follower Notices was reasonable in all the circumstances under s.214(3)(d) Finance Act 2014
  2. 2 Whether the penalties imposed under s.208 Finance Act 2014 should be upheld, set aside, or varied

Ratio Decidendi

The appellant's failure to take corrective action was reasonable in all the circumstances because he reasonably relied on professional advice from Montpelier, had no reason to doubt their expertise until January 2018, acted promptly upon realising the need for a second opinion, and genuinely believed there was no final judicial ruling at the relevant time. The Tribunal found his conduct objectively reasonable given his knowledge, experience, and the conflicting information from HMRC and his advisers.

Court Disposition

Appeal allowed; penalty cancelled.

Orders

  • The penalty imposed under s.208 Finance Act 2014 is cancelled.