Broomfield & Ors, R (On the Application Of) v Revenue And Customs

Part 4 of the Finance Act 2014 permits a follower notice where an appeal advances several grounds, provided one ground asserts a particular tax advantage arising from particular arrangements and a final judicial ruling would deny that advantage. Corrective action need only relinquish the denied advantage; a taxpayer may maintain a separate ground of appeal. Errors in describing statutory time limits or corrective action do not automatically invalidate notices. The court considers the statutory purpose, the procedural provision’s role and the consequences of the error. Service by post is effective at the recipient’s usual or last known residence, subject to proof that delivery did not occur there. Follower notices not delivered by the statutory deadline are invalid, and consequential accelerated payment notices also fail.

342 taxpayers sought judicial review of follower notices and accelerated payment notices issued by HMRC under Part 4 of the Finance Act 2014. Their tax arrangements involved services supplied through an Isle of Man partnership and payments made through trusts. Their appeals to the First-tier Tribunal advanced two grounds: that the payments were exempt under the UK-Isle of Man double taxation arrangements, and alternatively that the taxpayers were to be treated as having already suffered PAYE deductions.

HMRC relied on the final First-tier Tribunal decision in Huitson v Revenue and Customs Commissioners [2015] UKFTT 448 (TC). The issues concerned the statutory conditions for follower notices, the accuracy and effect of notices, service by the statutory deadline, and the validity of consequential accelerated payment notices.

1. Conditions B and C. The asserted advantage was the specific claim that payments from the trusts were exempt from income tax under the double taxation arrangements, not the broader outcome that no further tax would be payable. An appeal advancing that ground satisfied Condition B even though it also advanced a separate PAYE ground. The reasoning in Huitson v Revenue and Customs Commissioners [2015] UKFTT 448 (TC) would deny that advantage if applied to the arrangements, so Condition C was satisfied. The follower notices could therefore be given.
2. Corrective action and APNs. Corrective action required relinquishing the exemption ground, not abandoning the entire appeal. The separate PAYE ground could be maintained. An APN could nevertheless require immediate payment while the taxpayer continued to maintain the ground relating to the denied advantage. If that ground was relinquished, HMRC would ordinarily need to withdraw an APN insofar as its purpose had ceased.
3. Errors in descriptions. Sections 206(c) and 221(2)(c) required adequate explanations of the statutory provisions. Misstating the period for representations or corrective action, including by one day, did not make the notices invalid. Parliament did not intend total invalidity where the notices still alerted taxpayers to their rights and obligations. The court would also have refused relief because no claimant showed injustice or prejudice. The notices adequately described the corrective action by identifying the denied advantage and the agreement required to relinquish it.
4. Service. Under section 7 of the Interpretation Act 1978 and section 115(2) of the Taxes Management Act 1970, service required proper addressing, pre-payment and posting to the usual or last known residence. Where the deadline was critical, the taxpayer could prove that delivery did not occur at that address. Mr Bennett and Mr Cary proved non-delivery by the deadline; their follower notices and consequential APNs were invalid. Mr Cibulskis did not prove non-delivery, so his notices remained valid.
5. Disposition. The claim was dismissed except in the cases of Mr Bennett and Mr Cary, where the follower notices and consequential APNs were invalid. Notices already withdrawn in four other cases were treated as invalid if not withdrawn.