Whispering Smith Ltd v The Commissioners for HMRC
Decision date: 23 May 2022
Neutral citation: [2022] UKFTT 165 (TC)
Overall AI summary confidence: medium
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: medium
This appeal concerns follower-notice penalties imposed on Whispering Smith Ltd (WS) after HMRC treated the Supreme Court decision in UBS AG v HMRC (and DB) as a "relevant judicial ruling" that denied the tax advantage claimed under WS's STEP arrangements. The Tribunal held UBS was a relevant judicial ruling, rejected WS's defence that it was reasonable not to take corrective action, but allowed greater mitigation for cooperation, reducing the penalties to 34% of the denied advantage.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
A Supreme Court ruling that establishes a clear, generally applicable principle can be a "relevant judicial ruling" for the purposes of the follower-notice regime even where factual details differ, provided there is no scope for a reasonable person to disagree that the ruling would deny the taxpayer’s asserted advantage. In assessing reasonableness for failing to take corrective action, reliance on legal advice and litigation is not sufficient unless supported by credible, contemporaneous advice or engagement showing reasonable prospects.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal reiterated the high Haworth threshold that there must be "no scope for a reasonable person to disagree" that the earlier ruling denies the advantage. It also noted that post-deadline steps (settlement negotiations or late counteraction) may inform mitigation but generally do not excuse failure to take corrective action by the specified date.