I have written about Accelerated Payment Notices ("APNs") elsewhere. Here, I propose to examine a feature common to both APNs and Follower Notices ("FNs") - that of relevant Judicial rulings ("RJRs") - but with a particular emphasis on the latter. However, I need to begin by setting out how the (complex) Follower Notices regime operates. The FN regime seeks to put pressure on prospective appellants in tax cases to ditch their appeals by exposing them to the threat of a 50% tax geared penalty (i.e. on top of the tax that is due) should they (a) choose to pursue their appeal in circumstances where (b) there is a final RJR. If you receive a FN, you have 90 days to object and if you don't object (or you do, and your objections are dismissed) you become liable to that penalty. That penalty disappears if you win your appeal but if you lose your liability may be increased by up to 50%. Now, it has been said that you have no right of appeal against a FN. This is wrong, you do (see clause 207 of the Finance Bill). But that right of appeal looks deliberately constructed so as not to interfere with the critical pressure that FNs are designed to place upon the litigant: the pressure to throw the towel in even in cases where you consider yourself to have decent prospects of succeeding. Let's assume HMRC issue you with a FN. Your advisers tell you that you have decent prospects. But you're obviously concerned at the thought you might have to pay 150% of your present bill should the courts or tribunals disagree. And assume, also, that you disagree that a FN should have been issued perhaps because you consider there is no RJR. To make the right decision in these circumstances you need to know whether the FN was correctly issued. If it was, you can then form an assessment of whether your prospects of winning are so good that you'll take the chance of suffering a penalty of an extra 50% should you lose. If it wasn't, you are in the familiar regime of merely suffering (at least if they are yours to bear) the professional costs of pursuing the appeal. But the statutory appeal provided by clause 207 against the issuance of the penalty is extremely unlikely to take place until after you have fought and won (or lost) the appeal in respect of which the penalty is due. So the certainty you need - as to whether you are at risk of a 50% penalty - comes too late to be useful. Broadly I want to make two observations. First, it seems to me (for reasons set out following) that the circumstances in which courts or tribunals are likely to uphold the issuance by HMRC of FNs are likely to be very narrow indeed. Second (a point that will have to be explored elsewhere), it may well be the case that the sensible judicial review challenge is not a tanks-on-the-lawn challenge to the FN regime as a whole, but is a rather quieter one. When will courts or tribunals find there is an RJR? The concept of an RJR was hitherto unknown to English law. It is defined in clause 198(2) and (3) of the Bill as follows:
The Narrow Scope of Follower Notices
I have written about Accelerated Payment Notices ("APNs") elsewhere. Here, I propose to examine a feature common to both APNs and Follower Notices ("FNs") - that of relevant Judicial rulings ("RJRs") - but with a particular emphasis on the latter. However, I need to begin by setting out how the (complex) Follower Notices regime operates. The FN regime seeks to put pressure on prospective appellants in tax cases to ditch their appeals by exposing them to the threat of a 50% tax geared penalty (i.e. on top of the tax that is due) should they (a) choose to pursue their appeal in circumstances where (b) there is a final RJR. If you receive a FN, you have 90 days to object and if you don't object (or you do, and your objections are dismissed) you become liable to that penalty. That penalty disappears if you win your appeal but if you lose your liability may be increased by up to 50%. Now, it has been said that you have no right of appeal against a FN. This is wrong, you do (see clause 207 of the Finance Bill). But that right of appeal looks deliberately constructed so as not to interfere with the critical pressure that FNs are designed to place upon the litigant: the pressure to throw the towel in even in cases where you consider yourself to have decent prospects of succeeding. Let's assume HMRC issue you with a FN. Your advisers tell you that you have decent prospects. But you're obviously concerned at the thought you might have to pay 150% of your present bill should the courts or tribunals disagree. And assume, also, that you disagree that a FN should have been issued perhaps because you consider there is no RJR. To make the right decision in these circumstances you need to know whether the FN was correctly issued. If it was, you can then form an assessment of whether your prospects of winning are so good that you'll take the chance of suffering a penalty of an extra 50% should you lose. If it wasn't, you are in the familiar regime of merely suffering (at least if they are yours to bear) the professional costs of pursuing the appeal. But the statutory appeal provided by clause 207 against the issuance of the penalty is extremely unlikely to take place until after you have fought and won (or lost) the appeal in respect of which the penalty is due. So the certainty you need - as to whether you are at risk of a 50% penalty - comes too late to be useful. Broadly I want to make two observations. First, it seems to me (for reasons set out following) that the circumstances in which courts or tribunals are likely to uphold the issuance by HMRC of FNs are likely to be very narrow indeed. Second (a point that will have to be explored elsewhere), it may well be the case that the sensible judicial review challenge is not a tanks-on-the-lawn challenge to the FN regime as a whole, but is a rather quieter one. When will courts or tribunals find there is an RJR? The concept of an RJR was hitherto unknown to English law. It is defined in clause 198(2) and (3) of the Bill as follows: