HMRC Follower Notices: Why HMRC's View Is Not the Final Word

A follower notice tells you that someone else’s tax case has been decided, and that HMRC thinks their defeat is now yours. It asks you to amend your return or settle your dispute by a deadline. If you do not, HMRC can charge a penalty of up to 30% of the tax advantage in dispute.

Many taxpayers read the notice as the end of the matter. It is not. A follower notice is HMRC’s view of your position, not a court’s, and taxpayers have successfully challenged both the notices and the penalties that follow them.

This guide explains what a follower notice is, what HMRC has to show before issuing one, how to challenge it and what recent tribunal cases say about who wins and who does not.

What is a follower notice?

Follower notices were introduced by the Finance Act 2014. HMRC uses them where a court or tribunal has already ruled on arrangements it considers materially the same as yours. The notice tells you to take “corrective action”, which means amending your return or claim, or settling your appeal, so that you give up the tax advantage you claimed.

If you do not take corrective action by the deadline, HMRC can charge a penalty:

• For penalties assessed on or after 10 June 2021, the standard penalty is 30% of the denied advantage.
• Co-operation with HMRC can reduce that, but not below 10% (HMRC, CC/FS30a).
• A further penalty of up to 20% can apply if you take the case to the tribunal and are found to have acted unreasonably, which can take the total to 50%.
• Penalties assessed before 10 June 2021 may fall under the previous 50% regime (Finance Act 2021, Schedule 28).

What HMRC must show before issuing one

HMRC cannot issue a follower notice simply because it disagrees with you. Section 204 of the Finance Act 2014 sets four conditions:

• there is an open enquiry, or an appeal that has not been decided
• your return, claim or appeal relies on a tax advantage arising from particular arrangements
• HMRC is of the opinion that there is a relevant judicial ruling
• no follower notice has already been given to you for the same advantage, arrangements, ruling and tax period

The third condition is where the real argument lies. It rests on HMRC’s opinion, and the Supreme Court has made clear that the opinion has to clear a very high bar.

Haworth: when “likely” is not good enough

Mr Haworth used a “round the world” scheme. His trust claimed to be managed from Mauritius, not the UK, when it sold shares, so that no capital gains tax was due. HMRC issued him a follower notice relying on Smallwood, where the Court of Appeal had found that a similar trust was in fact managed from the UK. HMRC’s reasoning was, in effect, that his trust ticked the same boxes, so he would probably lose too.

The Supreme Court disagreed. In R (Haworth) v HMRC [2021] UKSC 25, it held that HMRC must form the opinion that there is “no scope for a reasonable person to disagree that the earlier ruling denies the taxpayer the advantage”. An opinion that the ruling is “likely” to do so is not enough. The follower notice was quashed, along with the accelerated payment notice that came with it.

The lesson is that HMRC has to identify the actual principle in the earlier case and show that it defeats your arrangements. Pointing to similar planning is not enough. Where your facts, your arrangements or the legal question differ, there may be room to push back.

Why one tribunal decision should not decide every case

Huitson v HMRC [2015] UKFTT 448 (TC) is the decision behind most of the follower notices sent to people who used Montpelier arrangements. It became final in 2016 because an appeal to the Upper Tribunal was not made in time, and HMRC then issued follower notices to many Montpelier users on the strength of it.

Huitson was a First-tier Tribunal decision. In Moore v HMRC [2024] UKFTT 518 (TC), the Tribunal said that “the most that can be said of any First-tier Tribunal decision is that it might be persuasive. It would never be binding upon another Tribunal”. It is hard to see why a First-tier Tribunal decision is good enough for HMRC to rely on but not for taxpayers, particularly when there is no right of appeal against a follower notice itself.

Haworth also confirmed that HMRC cannot assume one earlier decision settles every later case. Using a Montpelier arrangement does not mean your case will end the same way as Huitson. A taxpayer who receives a follower notice, especially without advice to explain it, should not treat it as a final ruling on their own circumstances just because HMRC does.

How to challenge a follower notice

There are three routes:

• Written representations. You can send HMRC representations within 90 days of receiving the notice, setting out why the conditions are not met or why the ruling does not apply to you.
• Judicial review. You can challenge the notice itself in the courts, as Mr Haworth did. Strict time limits apply, so speed matters.
• Appealing the penalty. If HMRC charges a penalty, you can appeal to the First-tier Tribunal under section 214 of the Finance Act 2014, including on the ground that it was reasonable in all the circumstances not to take corrective action. The appeal must be made within 30 days of the penalty notice (HMRC, CC/FS30a).

That last route is where Montpelier users have had their success.

The taxpayers who won

The starting point is HMRC v Comtek Network Systems (UK) Ltd [2021] UKUT 81 (TCC), where the Upper Tribunal set the test. The question is judged at the corrective action deadline, the taxpayer’s reasons for not acting are central, and co-operation after the deadline can reduce a penalty but not remove it.

Applying that test, the First-tier Tribunal has cancelled penalties in at least four Montpelier cases.

Andreae v HMRC [2022] UKFTT 142 (TC) is the leading example. Mr Andreae relied on Montpelier’s advice and had reason to doubt HMRC given its earlier errors. When his confidence in Montpelier began to fade, he sought a second opinion and took corrective action.

Baker v HMRC [2024] UKFTT 126 (TC) turned on HMRC’s own mistakes. The notices had been withdrawn and reissued because of errors, and HMRC had changed its position on National Insurance. The Tribunal found Mr Baker had no reason to doubt Montpelier and several reasons to doubt HMRC.

Maguire v HMRC [2026] UKFTT 929 (TC) accepted that Mr Maguire was not a tax specialist and reasonably relied on Montpelier’s expertise. The advice was not unreasonable on its face, and the Tribunal stressed that his conduct had to be judged by what he knew at the time, not with hindsight.

Rahman v HMRC [2026] UKFTT 1294 (TC) is perhaps the most striking. The Tribunal found that the ruling HMRC relied on was relevant and that the follower notices had been validly issued, yet it still cancelled the penalties. Mr Rahman was not a tax specialist, he had relied on professional advice to keep pursuing his position and, viewed objectively, that was reasonable.

One important caveat applies to all four cases. It was the penalties that were cancelled. The follower notices themselves remained valid, and the underlying tax was still payable.

The taxpayers who lost

Not every challenge succeeds, and the losses are just as useful to understand.

In Smith v HMRC [2026] UKFTT 131 (TC), the taxpayer acted as a “post box”, forwarding letters between HMRC and his advisers without engaging with them himself. In Kamperis v HMRC [2025] UKFTT 1441 (TC), the taxpayer could not show that his decision not to take corrective action was a properly informed choice.

Tribunals are sympathetic to taxpayers who engaged with the issues and made a reasoned decision on professional advice. They are far less sympathetic to those who simply waited, passed letters on, or cannot explain why their decision was reasonable.

Frequently asked questions

Can I appeal against a follower notice?

There is no right of appeal against the notice itself. You can make written representations to HMRC within 90 days, challenge the notice by judicial review, or appeal any penalty to the First-tier Tribunal.

What is the penalty for not complying with a follower notice?

For penalties assessed on or after 10 June 2021, it is 30% of the denied advantage, which co-operation can reduce to 10%. Up to 20% more can be added if a tribunal appeal is found to be unreasonable.

If my penalty is cancelled, do I still owe the tax?

Usually, yes. In the cases above, the penalties were cancelled but the follower notices stayed valid and the underlying tax was still payable.

The bottom line

A follower notice puts real pressure on a taxpayer, with large penalties at stake if the response is wrong. But it is HMRC’s view of the dispute, not a judicial ruling on your position. The scope of the notice, the ruling HMRC relies on and the reasons behind your own decisions all matter, and they need to be understood before you reply.

Speak to a specialist

WTT’s tax investigation team can review your follower notice, the ruling HMRC relies on and any penalty, and advise on the best route to challenge it. If HMRC is pursuing you for follower notice penalties, contact us today on +44 (0)20 3468 0000 or info@wttconsulting.co.uk for a confidential review.

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Author:

Fariha Khan, Tax Manager, WTT Tax Investigations | 4 November 2026

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About the author:

Fariha Khan is a Tax Manager in WTT's Tax Investigations team, working under Director of Tax Investigations Tom Wallace. She supports clients facing HMRC enquiries, follower notices and penalty disputes, with a focus on the case law that shapes how HMRC uses its powers.

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References

Finance Act 2014, Part 4, Chapter 2: follower notices. https://www.legislation.gov.uk/ukpga/2014/26/part/4/chapter/2

Finance Act 2021, Schedule 28: follower notices and penalties. https://www.legislation.gov.uk/ukpga/2021/26/schedule/28

HM Revenue & Customs. Tax avoidance schemes: penalties for follower notices, CC/FS30a. https://www.gov.uk/government/publications/compliance-checks-penalties-for-tax-avoidance-schemes-ccfs30a/tax-avoidance-schemes-penalties-for-follower-notices

R (Haworth) v HMRC [2021] UKSC 25. https://caselaw.nationalarchives.gov.uk/uksc/2021/25

Moore v HMRC [2024] UKFTT 518 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2024/518

HMRC v Comtek Network Systems (UK) Ltd [2021] UKUT 81 (TCC). https://www.gov.uk/tax-and-chancery-tribunal-decisions/the-commissioners-for-hm-revenue-and-customs-v-comtek-network-systems-uk-limited-2021-ukut-0081-tcc

Andreae v HMRC [2022] UKFTT 142 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2022/142

Baker v HMRC [2024] UKFTT 126 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2024/126

Maguire v HMRC [2026] UKFTT 929 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/929

Rahman v HMRC [2026] UKFTT 1294 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/1294

Smith v HMRC [2026] UKFTT 131 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/131

Kamperis v HMRC [2025] UKFTT 1441 (TC). https://caselaw.nationalarchives.gov.uk/ukftt/tc/2025/1441

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