Corrado v Revenue & Customs (INCOME TAX - follower notice - penalty for failure to take corrective action) [2019] UKFTT 275 (TC) (25 April 2019)

Corrado v Revenue & Customs (INCOME TAX - follower notice - penalty for failure to take corrective action) [2019] UKFTT 275 (TC) (25 April 2019)

The appellant did not take the statutory corrective action because he did not amend his return or notify HMRC as required by the Follower Notice. However, it was reasonable in all the circumstances for the appellant not to take that action, given the significant errors in the Follower Notice and Accelerated Payment Notice, the conduct of HMRC, and the appellant's genuine belief that he had settled his tax affairs. Therefore, the penalty must be cancelled.

Citation
[2019] UKFTT 275
Parties
Appellant: Giulio Corrado; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
25 April 2019
Procedural Posture
Income Tax Appeal (follower Notice Penalty) / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal allowed
Legal Topics
Income Tax, Follower Notice, Tax Avoidance Schemes, Penalties for Failure to Take Corrective Action, Reasonable Excuse, Finance Act 2014
Tax Law Income Tax Follower Notice Tax Avoidance Schemes Penalties for Failure to Take Corrective Action Reasonable Excuse Finance Act 2014

Case Brief

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Parties

Giulio Corrado

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant took 'corrective action' as required by the Follower Notice under Finance Act 2014 section 208
  2. 2 Whether it was reasonable in all the circumstances for the appellant not to take corrective action
  3. 3 Whether the penalty imposed for failure to take corrective action should be upheld, reduced, or cancelled

Ratio Decidendi

The appellant did not take the statutory corrective action because he did not amend his return or notify HMRC as required by the Follower Notice. However, it was reasonable in all the circumstances for the appellant not to take that action, given the significant errors in the Follower Notice and Accelerated Payment Notice, the conduct of HMRC, and the appellant's genuine belief that he had settled his tax affairs. Therefore, the penalty must be cancelled.

Court Disposition

Appeal allowed

Orders

  • The penalty of £57,541.08 imposed on the appellant for failure to take corrective action is cancelled.
  • The costs of the second hearing day are to be paid by the appellant.