Conor Maguire v The Commissioners for HMRC [2026] UKFTT 929 (TC)

[2026] UKFTT 00929 (TC)Case No TC 09921
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 25 March 2026Date Judgment date: 18 June 2026
Taylor House, 99 Rosebery Avenue, London EC1
Appeal reference: TC/2024/05881
INCOME TAX– Follower Notice – Penalty – Sections 204-214 of Finance Act 2014 –necessary corrective action not taken – reasonable in all the circumstances – appeal allowed
Before
TRIBUNAL JUDGE KIM SUKULTRIBUNAL JUDGE JUDITH HARRISON
Between
CONOR MAGUIREAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Maguire represented himself for AppellantDorothy Cantley and Rebecca Arnold, each a litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]The Appellant (“Mr Maguire”) appeals against a penalty issued under section 208 Finance Act 2014 (“FA 2014”) in respect of follower notices (“FNs”).[2]He appeals both the imposition of the penalty and, in the alternative, its amount.[3]In summary, for the reasons given below, the Tribunal finds that it was reasonable in all the circumstances for Mr Maguire not to have taken corrective action. As a result, we cancel the penalty payable under section 208 FA 2014.

The Hearing

[4]We had a bundle of 765 pages and an authorities bundle of 512 pages. Copies of two emails:(a) from Mrs Cantley to Mr Maguire on 5 January 2026 at 14:47; and(b) from Mr Maguire to Mrs. Cantley on 5 January 2026 at 18.54, which were forwarded to the Tribunal by Mrs. Cantley on 5 January 2026(together, the “Emails”) were provided to us at the hearing.[5]We heard evidence from Mr Maguire.

Preliminary Matters – Late Evidence

[6]Mr Maguire applied for his witness statement and the Emails to be admitted late. HMRC confirmed that they had sufficient time to review both the witness statement and the Emails and raised no objection. Having considered the overriding objective, the Tribunal admitted both the witness statement and the Emails into evidence.

The Factual Background

[7]Except where indicated, the following facts were not in dispute.[8]The tax arrangements[9]Mr Maguire participated in arrangements marketed by Montpelier that sought to exploit double taxation arrangements between the UK and the Isle of Man by routing earnings through Isle of Man partnerships and a trust. These arrangements were notified under the Disclosure of Tax Avoidance Schemes regime (“DOTAS”).[10]In his self-assessment tax return for the year ended April 2008, Mr Maguire returned income from the offshore trust and claimed an equivalent amount of double taxation relief.

The HMRC challenge

[11]HMRC opened an enquiry in January 2010. A closure notice was issued on 26 July 2011 under section 28A Taxes Management Act 1970, concluding that additional income tax and NICs were due. The appeal against that closure notice was struck out in June 2021.[12]On 2 April 2015, Mr Maguire received an accelerated payment notice (“APN”) for £10,114.50 which he paid. This APN was issued as a result of the arrangements having been disclosed under DOTAS and was later withdrawn because the arrangements were not in fact disclosable.[13]On 3 September 2015, the decision in Huitson v The Commissioners for HM Revenue & Customs [2015] UKFTT 448 (TC) was released.[14]Huitson concerned tax avoidance arrangements marketed by Montpelier, and HMRC understood this to be the same arrangements used by Mr Maguire. The First-tier Tribunal concluded that the arrangements were not effective, and that Mr Huitson was liable to income tax and NICs on his share of the income from an Isle of Man trust.[15]Following the decision in Huitson, HMRC issued two further APNs (for income tax of £10,114 and Class 4 NICs of £2,053) and later FNs in respect of the 2008 tax year, requiring corrective action.[16]On 6 February 2017, Mr Maguire made representations in respect of the FNs but did not take corrective action by the deadline, having decided to continue his appeal based on advice received from Montpelier.[17]On 29 March 2017, HMRC confirmed that having considered Mr Maguire’s representations, the FNs were upheld and extended the deadline for taking corrective action to 4 May 2017.[18]On 26 April 2017, Mr Maguire wrote to HMRC stating that he would not be taking corrective action by the deadline.[19]On 12 February 2018, HMRC issued a penalty notice explanation of a £5,057.21 penalty (i.e. a penalty charged by reference to the income tax liability only).[20]On 8 March 2019, HMRC wrote to Mr Maguire explaining that their view had changed, such that the penalty would be charged by reference to both the income tax and Class 4 NICs liabilities.[21]On 30 July 2019, HMRC issued a revised penalty explanation letter of a £6,083.89 penalty. This penalty was issued on 2 September 2019[22]On 4 August 2022, HMRC issued their view of the matter which reduced the penalty to £4,248.06. This reduction resulted from the penalty being charged by reference to the income tax liability only and the penalty percentage being reduced to reflect Mr Maguire’s cooperation for providing assistance in quantifying the tax advantage. The penalty reduction given was the maximum for this type of cooperation.

Advice received

[23]Mr Maguire only took tax advice from Montpelier in the relevant period.[24]Mr Maguire explained during the hearing that he had relied on Montpelier’s advice for many years (up to 2019). He understood Montpelier to be expert in this area of tax and had no reason to doubt their advice. He had shared with Montpelier most, if not all, of the correspondence he received from HMRC relevant to this appeal. During the period between the issue of the FN and the deadline for taking corrective action, Mr Maguire had been in regular contact with Montpelier for their advice, Montpelier had told him they were confident his appeal would succeed and that the reason Mr Maguire did not take corrective action by the deadline is that he had been advised not to withdraw or compromise his appeal. Mr Maguire interpreted the withdrawal of the first APN as evidence that his appeal was proceeding well. Although we were not provided with all of the correspondence between Mr Maguire and Montpelier, HMRC did not dispute that Mr Maguire had received this advice from Montpelier and had relied upon that advice. In addition, the Tribunal was provided with a letter dated 21 May 2018 written by Rathowen Limited (which is understood by the Tribunal to be part of Montpelier) which states that:
“We are aware that you have received at least one APN and perhaps an FN. We have drafted letters of representation for you and the ball is in HMRC’s court to reply.”
[25]The Tribunal was also provided with a letter from Mr Maguire to HMRC dated 6 February 2017 and 26 April 2017 making representations in respect of the FN. These letter sets out the view that Huitson is not a final judicial ruling, such that the conditions for issuing a FN have not been met. These letters also challenge whether NICs should be covered by the FN. In the April 2017 letter, Mr Maguire states that he will not be taking corrective action by the deadline.[26]The Tribunal considers that these letters support Mr Maguire’s evidence that Montpelier had advised him not to take corrective action, and to continue his appeal.[27]The Tribunal finds on balance (based on the express statement that Mr Maguire would not be taking corrective action, which is contained in the letter dated 26 April 2017 from Mr Maguire to HMRC) that he took an active decision not to take corrective action by 4 May 2017. The Law Burden of Proof

The Law

[28]HMRC bears the burden of proving that the conditions for issuing the penalty were met and that the amount was correctly calculated. Mr Maguire bears the burden of proving that it was reasonable in all the circumstances not to take corrective action, and that the penalty should have been reduced further for co-operation.[29]The standard of proof is the civil standard being the balance of probabilities.

Statutory Framework

[30]The legislation relevant to the issue of FNs and associated penalties, is contained in sections 204-218 and schedule 30 FA 2014.[31]The circumstances in which a FN may be issued are set out in section 204 FA 2014 and are not in dispute.[32]Section 206 FA 2014 sets out the required contents of a follower notice, including identification of the relevant judicial ruling and explanation of its effects.[33]Section 208(2) FA 2014 imposes a liability to a penalty if “necessary corrective action” is not taken in respect of the “denied advantage” before the “specified time”. Corrective action is amending the return and notifying HMRC that that has been done and also of the quantum of the denied advantage (the tax that will become due and payable).[34]Section 209(1) FA 2014 states that the penalty is 50% of the additional tax payable as “a result” of counteracting the denied advantage (paragraph 2 Schedule 30).[35]Section 210(1) allows HMRC to reduce the amount of the penalty if the person upon whom the penalty is imposed has co-operated with HMRC to reflect the “quality” of co-operation.[36]Section 210(3) sets out what constitutes co-operation for this purpose.[37]Section 210(4) provides that the penalty cannot be reduced below 10% of the value of the denied advantage[38]The grounds of appeal and powers of the Tribunal are set out in section 214 of FA 2014 and include a right to appeal where “it was reasonable in all the circumstances for [the taxpayer] not to have taken the necessary corrective action” Overview of Mr Maguire’s arguments reasonable in all the circumstances not to have taken corrective action

Overview of Mr Maguire’s arguments

[39]Mr Maguire considered it was reasonable in all the circumstances not to have taken corrective action.[40]He followed the advice of Montpelier not to take corrective action, and until after the deadline, he had no reason to doubt their advice.[41]Mr Maguire found HMRC’s correspondence confusing and did not understand the changes to HMRC’s position over time (for example, the change from the disputed amount from 12,167.78 to £10,114.12). He did not understand from HMRC’s correspondence that HMRC had reached a fixed and settled position.

penalty reduction

[42]Mr Maguire argued the penalty should have been further reduced to reflect the fact that by paying the disputed tax, he had “counteracted the denied advantage” and so provided co-operation falling within section 210(3)(b). Overview of HMRC’s arguments reasonable in all the circumstances not to have taken corrective action

Overview of HMRC’s arguments

[43]HMRC’s position is that by not taking corrective action by the deadline, Mr Maguire had not behaved as a prudent and reasonable taxpayer. In essence HMRC(a) it was not reasonable to rely on advice taken from a tax promotor; and(b) there was no evidence Mr Maguire had carefully considered the advice received to take a conscious decision not to take corrective action. penalty reduction[44]HMRC argued the penalty should not be reduced for co-operation falling within section 210(3)(b) as paying the disputed tax is not sufficient to “counteracted the denied advantage”. Discussion Reasonable in All the Circumstances

Discussion

[45]The words “reasonable in all the circumstances” have been considered by the Upper Tribunal in Comtek Network Solutions [2021] UKUT 81 (TCC), which emphasises that the Tribunal must give those words their ordinary and natural meaning, taking into account the taxpayer’s thought processes, the statutory context, and the purpose of the follower notice regime. That approach has been followed in subsequent First-tier Tribunal decisions, including David Andrae [2022] UKFTT 142 (TC).[46]The test is an objective one. The Tribunal must consider whether, viewed objectively, it was reasonable for this taxpayer, in his circumstances and at the relevant time, not to take corrective action. That assessment must be made without the benefit of hindsight and by reference only to what was known, or reasonably perceived, by the taxpayer at the time the decision was taken.[47]In undertaking the test, the Tribunal must consider:(1) why Mr Maguire chose not to take corrective action;(2) why Mr Maguire chose to miss the deadline for taking corrective action; and(3) the structure and purpose of the follower notice regime.[48]The Tribunal has carefully considered the purpose of the follower notice regime, which is to discourage taxpayers from continuing appeals that are bound to fail following a relevant judicial ruling. However, that purpose does not displace the express statutory defence. The test is not whether reliance on professional advice is ideal, but whether reliance on that advice was objectively reasonable for this taxpayer, in his circumstances, at the relevant time.[49]The Tribunal considers that in assessing whether Mr Maguire’s decision not to take corrective action was reasonable, must be judged in the period up to 4 May 2017 (i.e. up to the deadline for taking corrective action). Although actions and circumstances after this deadline may mitigate the penalty amount, and the Upper Tribunal noted the comments in Comtek that:
“it may be possible, in some limited circumstances, for events taking place after the deadline for taking corrective action to have some bearing on the question whether it was “reasonable in all the circumstances”
[50]The Tribunal has not identified any circumstances that arose after the 4 May 2017 deadline that would have a bearing on the question whether it was reasonable not to take corrective action. As a result, the Tribunal has not considered any events that occurred after 4 May 2017 in reaching its decision.[51]The Tribunal relies only on the state of HMRC’s correspondence and actions prior to 4 May 2017 in assessing Mr Maguire’s reasonableness; later events are referred to only for narrative completeness.[52]The Tribunal found Mr Maguire to be a straightforward, honest and reliable witness and accepts that he did not take corrective action because he relied on Montpelier’s advice. The Tribunal is satisfied that this reflects his genuine thought process during the period leading up to the deadline.[53]The question is therefore whether it was reasonable in all the circumstances for Mr Maguire to rely on that advice. Mr Maguire submitted that:(1) The quality of the advice from Montpelier appeared reasonable on its face and there was regular and consistent communication from Montpelier.(2) HMRC’s correspondence was confusing. For example, the first APN (which was withdrawn) covered income tax only. The second set of APNs covered both income tax and NICs. It was not clear to Mr Maguire that HMRC had reached a final position.(3) Mr Maguire understood the withdrawal of the first APN as evidence that the appeal was succeeding (consistent with Montpelier’s advice).[54]By contrast HMRC considered that for a taxpayer to rely on advice to justify not taking corrective action, that advice needed to be provided by a third party (and not by the promoter of the arrangements).[55]In assessing whether reliance on that advice was reasonable, the Tribunal takes into account that Mr Maguire was not a tax expert, he understood Montpelier to have relevant expertise and that their advice appeared reasonable on its face.[56]Although HMRC regarded the decision in Huitson as determinative of Mr Maguire’s arrangements, the Tribunal accepts that, before the deadline, it was not self-evident to a non-expert taxpayer that his own appeal was bound to fail. Mr Maguire was entitled to rely on professional advice as to the application, relevance, and finality of that decision in relation to his own circumstances.[57]The Tribunal also accepts that, prior to the deadline, HMRC’s correspondence and actions could reasonably have unsettled Mr Maguire. In particular, the issue and subsequent withdrawal of an APN could objectively have been interpreted as lending weight to the advice he received that his appeal remained viable.[58]The Tribunal does not consider that the follower notice regime imposes a requirement that a taxpayer must automatically disregard advice solely because it is provided by a promoter of the arrangements. Where, as here, the taxpayer is not a tax specialist, the advice discloses no obvious deficiencies, the amount of tax at stake is relatively modest, and there are no clear warning signs, it may be objectively reasonable for the taxpayer to rely on that advice, even if it ultimately proves to be wrong.[59]Taking all these matters together; the nature of the advice received, the absence of clear warning signs, the taxpayer’s personal circumstances, and the evolving position communicated by HMRC, the Tribunal is satisfied that Mr Maguire’s conduct fell within the class of cases Parliament intended to protect via the ‘reasonable in all the circumstances’ defence.[60]Accordingly, the appeal succeeds and the penalty must be cancelled.

penalty reduction

[61]In light of our conclusion that no penalty is payable, the following discussion is included for completeness only.[62]The starting point for the amount of an FN penalty is 50% of the value of the denied advantage. The penalty amount can be reduced, under section 210 FA 2014, but only if a person has 'co-operated' with HMRC, within the narrow definition in section 210(3), and HMRC cannot reduce the penalty to less than 10% of the value of the denied advantage.[63]The Upper Tribunal in Revenue and Customs Commissioners v Comtek Network Solutions ([2021] UKUT 81 (TCC)), at paragraph 8 considered that co-operation, in this context, has 'a limited and specific meaning and not everything that might, in ordinary usage, be referred to as "co-operation" is to count.'[64]Section 210(1)(b) FA 2014 provides that co-operation is only relevant to the reduction of the penalty up until the point the penalty has been assessed. In this case, the FN penalties were assessed on 16 September 2019, and so any co-operation after this date is not relevant.[65]In calculating the penalty, HMRC have reduced the FN penalties to reflect Mr Maguire's co-operation falling within section 210(3)(a) only.[66]Mr Maguire argued the penalty should have been further reduced to reflect the fact that by paying the disputed tax, he had “counteracted the denied advantage” and so provided co-operation falling within section 210(3)(b). There was no dispute between HMRC and Mr Maguire that the disputed tax amount had been paid.[67]HMRC’s position is that the only way to counteract the denied advantage would be for Mr Maguire to give up his appeal (i.e. take corrective action). HMRC advanced a similar argument in Comtek. The term “counteraction” as used in section 210 is not defined. The Upper Tribunal in Comtek explained that:
“In our judgment, the concept of "counteraction" needs to be understood purposively. The purpose of the follower notice regime is to provide taxpayers with a strong disincentive to continue to consume public resources by continuing tax disputes which appear to have been resolved by other finally decided cases. Therefore, in our judgment, full "counteraction" occurs, in the case of a follower notice issued after an appeal has been commenced, if the taxpayer gives up the appeal and communicates that fact to HMRC. The requirement to consider "timing" means that the amount of credit available for such counteraction will reduce the later it takes place. The requirement to consider "nature" and "extent" means that partial credit may be available for steps on the way to full counteraction. We do, however, agree with HMRC that mere payment of the amount in dispute, or of any APN does not of itself amount to full counteraction. A person paying an APN is doing nothing more than complying with a statutory obligation to pay a particular sum by a particular time on account of that person's overall tax liability. Compliance with that statutory obligation is entirely consistent with continuing to progress an appeal against that liability. In the context of this appeal, therefore, "counteraction" involves surrendering the underlying dispute as to the efficacy of the Scheme and not the payment of amounts demanded under the APN . Decision In this case, the Company's actions which are said to constitute counteraction consisted of (i) agreeing a payment plan in respect of the APN it had received, (ii) honouring that payment plan and so making, within the agreed timescales, the full advance payment required by the APN and (iii) doing so having the subjective belief that it was thereby compromising all outstanding disputes with HMRC including the underlying dispute as to the efficacy of the Scheme. As we have said, on their own, items (i) and (ii) did not involve counteraction. The question, therefore, is whether, in conjunction with the Company's belief at (iii), they amounted to a step on the way to counteraction.”
[68]Unlike in Comtek, Mr Maguire did not suggest that he believed that by paying the tax under dispute he was comprising his dispute with HMRC. The evidence before the Tribunal was that Montpelier had advised Mr Maguire to continue his appeal, and he acted in accordance with that advice.[69]Given this, and the Upper Tribunal’s statement that payment of the disputed tax is not co-operation within section 210(3)(b) FA 2014, we do not consider that by paying the disputed tax, Mr Maguire counteracted the denied advantage. As such, we do not consider that, if the penalty had not been cancelled, it would have been reduced due to co-operation falling within section 210(3)(b) FA 2014.

Conclusion

[70]The Tribunal finds that Mr Maguire’s failure to take the necessary corrective action was reasonable in all the circumstances. The appeal is allowed. The penalty is cancelled.

Right to apply for permission to appeal

[71]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 18 June 2026