A follower notice is a notice served on people participating in a tax avoidance schemes who are described as “followers” to a representative case decided in HMRC’s favour. These are often in respect of claims for tax and National Insurance, where their tax avoidance scheme bears very similar characteristics.
A follower notice is often issued to tax avoidance scheme participants after the lead case is decided.
The use of a follower notice aims to reduce the time, complexity and cost of litigation by only dealing with a few lead representative cases at court.
- the advantage to a follower in accepting the finding and, upon receipt of a follower notice, is that it enables the issue to be decided without the cost of court proceedings;
- it is not the case, however, that by complying with a follower notice you will have any savings of tax penalties or interest;
- a follower notice may be accompanied by, or closely followed by, an accelerated payment notice.
If the follower notice is ignored, and subsequently HMRC’s position is supported by the tax tribunal or court, the taxpayer faces a penalty for not taking corrective action upon receipt of the follower notice.