HMRC Follower Notices & Penalties Cancelled (Roy Baker v HMRC)

In a recent legal development, the First-tier Tribunal (FTT) ruled in favour of the taxpayer, Roy Baker, in a case against HMRC regarding follower notice (FN) penalties. This decision sheds light on the complexities of tax avoidance arrangements and the implications of failure to take corrective action in response to Follower Notices.


Our lawyers have a track record of successfully challenging HMRC decisions and will assist you to get an optimal result. We analyse the merits at the very outset in an initial video conference together with leading (ex-HMRC and Big 4) tax litigation counsel. We provide urgent advice and representation to clients from our unique expert team of established Tax specialist solicitors and barristers with a proven track record of delivering results. Call us on +442071830529, or email [email protected].

Roy Baker & Montpelier Tax Consultants

Roy Baker, an IT data analyst, found himself embroiled in a tax avoidance scheme marketed by Montpelier Tax Consultants (Isle of Man) Ltd. Relying heavily on Montpelier’s advice due to his limited tax knowledge, Baker participated in an arrangement aiming to exploit double taxation arrangements between the UK and the Isle of Man.

First-tier Tribunal’s Decision

Despite HMRC’s issuance of Follower Notices requiring corrective action, Baker maintained his reliance on Montpelier’s advice, believing he had a strong case. Consequently, he did not take the prescribed corrective action. Upon appeal to the FTT, Baker’s penalties were cancelled as the tribunal found his reliance on Montpelier’s advice reasonable, considering HMRC’s errors and inconsistencies in their dealings with him.

What are Follower Notices?

If you engage in a tax avoidance scheme resembling one successfully challenged by HMRC in court, HMRC will review your tax affairs and may issue you a follower notice. 

A follower notice prompts you to settle your tax affairs with HMRC. Failure to do so may result in a penalty. 

In addition to a follower notice, you may also be subject to an Accelerated Payment Notice (APN). If so, you must pay the accelerated payment along with resolving your tax affairs. 

Accelerated Payment Notice

You may receive an APN if there is an ongoing enquiry, dispute, or appeal related to your tax affairs, and you have either:

  • Received a follower notice
  • Utilised a Disclosure of Tax Avoidance Schemes (DOTAS) notifiable arrangement
  • Been issued a General Anti-Abuse Rule (GAAR) counteraction notice

Upon receiving an APN, you are required to pay the disputed tax amount. HMRC will retain this sum until the conclusion of the enquiry or resolution of your appeal. Should HMRC determine that you do not owe the amount, it will be refunded to you.

Failure to pay the disputed tax by the specified date on the notice may result in penalties.

Partner Payment Notice: If you are a member of a partnership, you will receive a Partner Payment Notice (PPN) instead of an APN.

A PPN typically functions similarly to an APN, but the specific notice you receive will outline the actions you need to take.

Action Upon Receiving a Notice: The notice you receive will detail:

  • The reason for its issuance
  • Next steps required
  • Procedures in case of disagreement
  • Any applicable deadlines
  • Potential penalties for inaction

It is imperative to follow the instructions outlined in the notice you receive.

HMRC Penalties

Failure to adhere to the instructions in a received notice may result in penalties. In such a scenario, you will receive a notice of penalty assessment specifying the amount and deadline for payment, along with an explanation of how the penalty is calculated.

Purpose and Procedure

Follower notices are employed by HMRC to streamline the litigation process, aiming to reduce time, complexity, and costs associated with legal proceedings. By focusing on a few lead representative cases, HMRC aims to expedite resolution and clarify the legality of similar schemes.

Advantages and Considerations

Accepting a follower notice enables the issue to be resolved without resorting to costly court proceedings. However, compliance with a follower notice does not guarantee tax savings or the avoidance of penalties and interest. Additionally, a follower notice may be accompanied by or followed closely by an accelerated payment notice.

Consequences of Ignoring Follower Notices

Failure to respond to a follower notice and take corrective action can result in penalties if HMRC’s position is upheld by the tax tribunal or court. Therefore, it’s crucial for taxpayers to understand the implications of follower notices and seek appropriate legal advice when faced with such notifications.

Implications for other similar case Taxpayers

The ruling in R Baker v HMRC [2024] UKFTT 126 (TC) highlights the significance of understanding follower notices and penalties in tax law. This is the second case in which the tribunal has allowed appeals against penalties under the follower notice regime arising from the taxpayer participating in a scheme marketed by Montpelier Tax Consultants involving the routing of earnings through Isle of Man trusts. The scheme was held to be ineffective in Huitson v HMRC [2015] UKFTT 448 (TC). Taxpayers in the same position should seek independent legal advice.


HMRC decision letters containing penalties or imposing assessments offer time limited deadlines within which to appeal. Often these short deadlines (e.g. 30 days) can run from the date of the letter which means you have less time than you think. Your legal rights will become irreversibly time-barred if you fail to take legal action. Therefore, you should seek specific legal advice about your HMRC tax dispute at the very first opportunity so that you understand the time you have left. Failure to take advice or delay in taking action can be fatal to your prospects of success.

Download the Judgment Here

Expert UK Tax Litigation Lawyers

At LEXLAW, we specialise in tax law and offer tailored legal solutions to navigate complex tax matters effectively. Our experienced team can provide expert advice and representation to clients facing challenges related to follower notices, HMRC penalties, and tax disputes. Contact us today for personalised assistance in safeguarding your financial interests and ensuring compliance with tax regulations.

The decision in Roy Baker v HMRC [2024] UKFTT 126 (TC) underscores the need for taxpayers to critically assess advice received in response to follower notices. By seeking independent legal advice, taxpayers can make informed decisions and mitigate potential penalties.

Expert London Tax Lawyers

If you need HMRC Tax Disputes advice, we are available to aid you at every stage of the HMRC appeals process. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the Tax Tribunal. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy.

We are experts in adeptly presenting evidence and employing bespoke arguments combining the facts of your case, previous cases and current legislation to ensure your appeal is a successful one. We provide urgent advice and representation to clients from our unique expert team of established tax and duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].

Want legal advice from Tax Solicitors on your case?

Our simple enquiry form goes immediately to our tax litigators in Middle Temple, London. Call us on +442071830529 from 9am-6pm.

Call Now Button search previous next tag category expand menu location phone mail time cart zoom edit close