Matthew Smith v The Commissioners for HMRC
Decision date: 23 January 2026
Neutral citation: [2026] UKFTT 131 (TC)
Overall AI summary confidence: high
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: high
This appeal concerned follower notice penalties (FNPs) assessed against Matthew Smith for tax years 2004/05–2007/08 arising from participation in a Montpelier-promoted scheme. The Tribunal held the follower notices were valid and in time and found Mr Smith did not act reasonably by failing to take corrective action before the final deadline. The Tribunal dismissed the appeal but accepted HMRC’s 2024 review reducing the total penalty to £32,541.32 (42% of the denied advantage, NICs excluded).
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: medium
The Tribunal’s ratio is that a taxpayer’s passive failure to read or engage with HMRC correspondence and mere reliance on an adviser, without more, does not make it reasonable to forgo statutory corrective action; entering a payment plan under an APN does not amount to the corrective action required to avoid follower notice penalties; and on appeal the Tribunal may substitute an alternative penalty decision that HMRC had power to make.
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 observed (obiter) that HMRC’s long delays in conducting reviews, while regrettable, do not necessarily change whether a taxpayer acted reasonably before the corrective-action deadline, and that unsubstantiated claims of mental-health effects are insufficient to alter findings on reasonableness.