Smith v Revenue and Customs (INCOME TAX - follower notice - penalty for failure to take corrective action - whether reasonable in all the circumstances not to take corrective action) [2026] UKFTT 131 (TC) (23 January 2026)

Smith v Revenue and Customs (INCOME TAX - follower notice - penalty for failure to take corrective action - whether reasonable in all the circumstances not to take corrective action) [2026] UKFTT 131 (TC) (23 January 2026)

The appellant failed to take corrective action as required by the Finance Act 2014, and his reliance on advisers, lack of understanding, and confusion did not amount to reasonable behaviour in all the circumstances. The penalties were validly issued, and the amount was properly reduced for limited co-operation but not further.

Citation
[2026] UKFTT 131
Parties
Appellant: Matthew Smith; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
23 January 2026
Procedural Posture
Income Tax Appeal (follower Notice Penalty) / First Tier Tribunal (tax Chamber) Substantive Judgment
Outcome
Appeal dismissed; penalty amount varied
Legal Topics
Follower Notice Penalties, Corrective Action, Reasonableness Standard, Co Operation Reduction, Double Taxation Arrangements, Tax Avoidance Schemes
Tax Law Follower Notice Penalties Corrective Action Reasonableness Standard Co Operation Reduction Double Taxation Arrangements Tax Avoidance Schemes

Case Brief

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Parties

Matthew Smith

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the follower notice penalties were validly issued under Finance Act 2014
  2. 2 Whether it was reasonable in all the circumstances for the appellant not to take corrective action
  3. 3 Whether the penalty amount should be reduced for co-operation

Ratio Decidendi

The appellant failed to take corrective action as required by the Finance Act 2014, and his reliance on advisers, lack of understanding, and confusion did not amount to reasonable behaviour in all the circumstances. The penalties were validly issued, and the amount was properly reduced for limited co-operation but not further.

Court Disposition

Appeal dismissed; penalty amount varied

Orders

  • Follower notice penalties upheld as validly issued
  • Penalty amount reduced to £32,541.32 in accordance with HMRC's review