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)

Although Mr Corrado did not take the statutory corrective action by returning the required form, it was reasonable in all the circumstances for him not to do so, given the significant errors in HMRC's notices, the confusion caused, and his genuine belief (shared by his adviser) that payment of the correct tax settled the matter. Therefore, the penalty must be cancelled.

Citation
[2019] UKFTT 275 (TC)
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; penalty cancelled.
Legal Topics
Income Tax, Follower Notice, Tax Avoidance Scheme, Penalty for Failure to Take Corrective Action, Reasonable Excuse, Accelerated Payment Notice
Tax Law Income Tax Follower Notice Tax Avoidance Scheme Penalty for Failure to Take Corrective Action Reasonable Excuse Accelerated Payment Notice

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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 was correct in quantum

Ratio Decidendi

Although Mr Corrado did not take the statutory corrective action by returning the required form, it was reasonable in all the circumstances for him not to do so, given the significant errors in HMRC's notices, the confusion caused, and his genuine belief (shared by his adviser) that payment of the correct tax settled the matter. Therefore, the penalty must be cancelled.

Court Disposition

Appeal allowed; penalty cancelled.

Orders

  • The penalty of £57,541.08 is cancelled.
  • Costs of the second hearing day to be paid by the Appellant.