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Finance Act 2014

Giving of follower notices

7.Section 204 defines the conditions which must apply for HMRC to issue a follower notice to a person.

8.Subsection (2) provides the first condition that there is an open tax enquiry into that person’s return or claim, or the person has made a tax appeal.

9.Subsection (3) provides the second condition that the return or claim subject to the enquiry, or the appeal, is made on the basis that the person obtains a tax advantage from the use of tax arrangements.

10.Subsection (4) provides the third condition that there has been a judicial ruling relevant to the person’s return/claim or appeal.

11.Subsection (5) provides the fourth condition, that no previous follower notice has been given to the person in respect of the same tax arrangements and tax advantage, unless it was withdrawn.

12.Section 205 sets out the conditions in which a judicial ruling is treated as ‘relevant’.

13.Subsection (3) provides that a judicial ruling in another party’s litigation is relevant to a person if the ruling relates to tax arrangements; the principles or reasoning behind the ruling would, if applied to those arrangements, deny the advantage claimed or part of it; and it is a final ruling.

14.Subsection (4) defines a ruling as final if it is made by the Supreme Court or, if made by a lower court or tribunal, no appeal is made against it, permission to appeal is refused or, if an appeal is made, it is abandoned or otherwise disposed of before it was determined.

15.Section 206 provides that a follower notice must identify the judicial ruling on which it is based, explain why HMRC consider it is relevant to the person’s tax arrangements, and set out the consequences of the taxpayer’s action in response to the notice.

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