The taxpayer’s failure to take corrective action following the issue of follower notices was not reasonable in all the circumstances, and penalties imposed for non-compliance were proportionate and were upheld.  

The appellant participated in a tax avoidance scheme marketed by a firm of tax consultants (Montpelier’).  The scheme was said to be exempt from UK tax income received by the appellant as a trust beneficiary on the basis that it was the within paragraph 3(2) of the UK-Isle of Man double taxation arrangements. However, the scheme was found not to have worked in Huitson v HMRC [2015] UKFTT 448 (TC). 

The appellant should have taken corrective action by the following steps: (1) Amending his self-assessment return to counteract the denied advantage; and (2) Notifying HM Revenue