Meet Reis Wasserman, a Tax Manager in our Creative Industries team, working with businesses across film, television, theatre and the wider creative sectors.

From navigating creative industry tax reliefs to supporting businesses as they grow, Reis Wasserman enjoys getting to know the people behind the business and finding practical answers to often intricate tax questions.

We caught up with Reis to find out more about his role, what goes on behind the scenes and why being part of a client’s journey is one of the most rewarding parts of what he does.

Tell us a little about what you do at NLP and the clients you typically work with.

I’m a Tax Manager in our Creative Industries department at NLP, supporting businesses across the film, television, theatre and wider creative sectors.

What’s one question you find yourself being asked by clients again and again?

What’s something people might not realise goes on behind the scenes when you’re helping a client?

People often see the final piece of advice, but not the amount of work that goes into getting there. Behind the scenes, we’re reviewing legislation, HMRC guidance, contracts, financial information and sometimes several possible scenarios before reaching a conclusion.

The technical answer matters, of course, but it also has to make commercial sense for the client and their business. That’s the part I enjoy, taking something complicated, working through the detail and finding an answer that actually works in practice for our clients.

What do you enjoy most about working closely with clients?

What’s something your NLP colleagues would immediately associate with you?

I’d like to think my colleagues would describe me as approachable and always happy to help.

I really value collaboration, and one of the things I enjoy most about working at NLP is drawing on the expertise of colleagues across the firm. The best results often come from working together, and I’m always happy to pick up the phone, share ideas and support where I can.

Receiving a letter from HMRC can be unsettling. But an enquiry doesn’t automatically mean you’ve done anything wrong.

Many people assume HMRC only investigates businesses or individuals it believes have made mistakes or deliberately avoided tax. The reality is very different. HMRC has the authority to open an enquiry into almost anyone’s tax affairs, even where tax returns have been submitted correctly.

If you’re contacted, you’ll still need to respond, provide information and deal with the enquiry. Understanding why investigations happen, what they involve and how to prepare for them can make the process far less daunting.

Can HMRC investigate anyone?

In short, yes.

HMRC can open an enquiry into the tax affairs of:

• Limited companies
• Sole traders
• Landlords
• Company directors
• Anyone required to submit a Self Assessment tax return

An enquiry isn’t, by itself, evidence of wrongdoing.

The important thing to remember is that an investigation is not the same as an accusation.

Why does HMRC open tax investigations?

HMRC’s role is to ensure the correct amount of tax is collected. To do that, it compares information from a wide range of sources, including tax returns, payroll data, Companies House records, banks, employers and other third parties.

An enquiry may open because:

• Information differs from HMRC’s records.
• Income appears to be missing.
• Figures differ significantly from previous years.
• Certain transactions require clarification.
• A return has been selected as part of a compliance programme.

In many cases, HMRC is simply seeking additional information before it can confirm everything is in order.

Does an investigation mean you’ve made a mistake?

Not necessarily.

Many enquiries ultimately identify nothing more than an innocent error or a misunderstanding of what can often be a complex tax system. Others conclude that everything has been reported correctly.

Some investigations are also selected at random.

Whatever the reason, it’s important to respond carefully. HMRC may ask for supporting records, explanations of how figures were calculated or further evidence relating to your return. Having accurate records and professional support can make the process significantly easier.

What can a tax investigation cost?

Many people assume that the only financial impact comes from additional tax. In reality, the professional time required to deal with an enquiry is often one of the largest costs.

Depending on the nature of the investigation, your accountant may need to:

• Review several years of financial records.
• Prepare detailed responses to HMRC.
• Correspond directly with tax officers.
• Attend meetings.
• Gather and present supporting documentation.
• Challenge HMRC’s conclusions where appropriate.

While some enquiries are resolved relatively quickly, others can continue for many months. As the work increases, professional fees can also grow, sometimes reaching several thousand pounds depending on the complexity of the case.

Can you protect yourself against these costs?

Although nobody can prevent HMRC from opening an enquiry, you can prepare for the possibility.

At NLP, we offer Tax Investigation Fee Protection to help cover the professional fees associated with representing clients during an HMRC enquiry, subject to the terms of the service.

Rather than worrying about mounting professional costs while responding to HMRC, you’ll have experienced advisers on hand to manage correspondence with HMRC, prepare responses and guide you through every stage of the enquiry.

Whether you’re a business owner, landlord, company director or individual taxpayer, our aim is to minimise disruption and provide practical, expert support so you can focus on what matters most while we handle the enquiry.

Who should consider Tax Investigation Fee Protection?

Tax investigations aren’t limited to large organisations or businesses with complex structures.

They may be relevant if you are:

• A company director
• A business owner
• Self-employed
• A landlord
• Required to complete a Self Assessment tax return
• Receiving income from multiple sources

Good record keeping is always essential, but it doesn’t remove the possibility of being selected for an enquiry.

Why do many people choose Tax Investigation Fee Protection?

Few people expect a letter from HMRC.

When one arrives, the questions are often immediate:

• Why have I been contacted?
• What happens next?
• How long will this take?
• Who will deal with HMRC?
• What could this end up costing?

These concerns are understandable.

Having professional representation can reduce much of that uncertainty. Experienced advisers manage discussions with HMRC, guide clients through each stage of the process and help minimise disruption, providing reassurance from start to finish.

Is Tax Investigation Fee Protection worth considering?

Whether Tax Investigation Fee Protection is appropriate depends on your individual circumstances.

Many people value the reassurance of knowing that, should HMRC ever open an enquiry, they have experienced professionals ready to manage the process and help cover the associated professional fees.

While the hope is that you’ll never need to use the service, having support available can save considerable time, stress and unexpected cost if HMRC does get in touch.

What should you do if HMRC contacts you?

If you receive a letter from HMRC:

1. Read it carefully and don’t ignore it.
2. Respond within any stated deadlines.
3. Gather the records requested.
4. Avoid guessing if you’re unsure of an answer.
5. Speak to your accountant as soon as possible.

Early advice can help ensure the enquiry is handled efficiently and accurately.

How we can support you

Receiving a letter from HMRC can feel overwhelming, particularly if you’ve never experienced a tax enquiry before. Our tax specialists can explain what’s happening, communicate with HMRC on your behalf and guide you through each stage of the process. Whether you need advice on responding to an enquiry or would like to discuss Tax Investigation Fee Protection before any issues arise, we’re here to help.

Businesses impacted by change to the main financial reporting standard, FRS 102, should be alert to the potential for repercussions for their tax position as a result.

Changes to FRS102 are significant for companies, as the change to FRS 102 takes effect for accounting periods starting on or after 1 January 2026, with a new five-step model for revenue recognition, and change to the way that leases are accounted for. The distinction between operating and finance leases for lessees is axed, so that most leases will be brought onto the balance sheet.

The impact of these developments, however, can be unexpectedly far-reaching. The ripples can extend to the tax liability, and its timing, as well as wider compliance issues. The basis for the Corporation Tax calculation being the accounting profit before tax, any timing changes in accounting profit can change the timing of taxable profits. Change to revenue recognition may accelerate or defer taxable income. Transitional adjustments will typically impact the tax liability in the first accounting period to which the new standard applies. Where leasing arrangements are substantial, the balance sheet is likely to show significantly higher levels of assets and liabilities. Change to figures for gross assets and turnover can have other consequences. Examples include entry into compliance regimes like off-payroll working; or eligibility for tax reliefs, such as the Enterprise Investment Scheme and Seed Investment Scheme.

As the change beds in, early discussion is recommended. We are here to help.

HMRC has recently partnered with British-based data analytics and AI leaders, Quantexa, in a £175 million deal.

Quantexa works with public sector organisations globally on fraud, risk, compliance and data modernisation initiatives. The aim in this case is to support the modernisation of HMRC’s core data infrastructure, giving it a clearer, connected view of its data. This should:

• improve performance
• identify tax at risk
• strengthen control.

According to HMRC, ‘Modern data and AI tools help us reduce duplication, better link customer information across systems and support right-first-time outcomes, improving the service we provide to customers while continuing to tackle fraud and non-compliance.’

The new tools at its disposal should give HMRC a bird’s eye view not just of its own internal data, but data from other sources as well. This will enable it to spot patterns and relationships suggesting fraud more rapidly and accurately than ever before.

The programme will also lay the groundwork for advanced AI capabilities, and support wider transformation efforts. These include work to close the tax gap, and the delivery of faster, more seamless customer service.

Even where headline income tax rates remain unchanged, your tax bill may not.

That’s because tax thresholds remain frozen, meaning more of your income can become taxable over time or fall into a higher tax band as earnings increase – a process often referred to as fiscal drag.

The current GOV.UK income tax guidance confirms that for the 2026/27 tax year:

• The Personal Allowance remains £12,570
• Basic rate tax applies from £12,571 to £50,270
• Higher rate tax applies from £50,271 to £125,140
• Additional rate tax applies above £125,140 in England, Wales and Northern Ireland.

Finance Act 2026 has legislated for the freeze to continue until 5 April 2031.

The Personal Allowance will remain £12,570, the basic rate limit £37,700, and the higher-rate threshold £50,270 throughout that period.

What this means for you

A pay rise doesn’t always mean you’ll take home significantly more.
Employees, pensioners and anyone receiving savings or rental income should remember that unchanged tax rates do not necessarily mean an unchanged tax bill.
It’s also important to be aware that the Personal Allowance reduces by £1 for every £2 of adjusted net income above £100,000, before reducing to nil once adjusted net income reaches £125,140.

Planning ahead

Reviewing your tax position regularly can help avoid unexpected surprises.

It may be worth checking your tax code and reviewing pension contributions or Gift Aid payments where appropriate. If your income is approaching the £100,000–£125,140 range, understanding how the Personal Allowance taper works can become particularly valuable.

Fiscal drag is often described simply as the tax rise that happens when thresholds don’t move. Over time, it can have a noticeable impact on your overall tax position.

If you receive income from dividends, savings or rental property, it’s worth understanding what has already changed from 6 April 2026 and what is due to change from 6 April 2027. These changes affect three of the most common sources of personal income, so reviewing your position now could help you plan with greater confidence.

HMRC’s technical note confirms that from 6 April 2026, dividend tax rates will increase to 10.75% at the ordinary rate and 35.75% at the upper rate, while the additional rate remains 39.35%. The dividend allowance will remain £500.

From 6 April 2027, taxable savings income above any available 0% savings allowances will be taxed at 22%, 42% and 47%, while taxable property income will also be subject to separate rates of 22%, 42% and 47% in England, Wales and Northern Ireland.

What this means for you

If you receive dividend income outside ISAs or pensions, now is a good time to review your position. Savers should check whether their interest is likely to exceed the Personal Savings Allowance, while landlords should consider how the new 2027/28 property rates could affect future taxable rental profits.

HMRC has also confirmed that the starting rate for savings and the Personal Savings Allowance remain unchanged. The Rent a Room Scheme and property allowance are also unchanged.

Planning ahead

Where appropriate, consider making full use of your ISA allowances and keep accurate records of dividend vouchers and bank interest. If you own rental property, review your expected taxable profit after allowable deductions and reliefs rather than simply focusing on rental income received.

The new rules also change the income tax calculation so that allowances and reliefs are applied first against non-property, non-savings and non-dividend income where possible. From 2027/28, this means the order in which different types of income are taxed may become more significant.

Changes to inheritance tax (IHT) mean pension wealth could soon form part of your estate in circumstances. Many people previously expected it to remain outside the IHT calculation.

From 6 April 2027, most unused pension funds and pension death benefits will be included in the value of a deceased person’s estate. This is for IHT purposes, subject to any available exemptions and excluded benefits.

HMRC has confirmed that from 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for inheritance tax purposes.

What this means for you

This change could affect existing estate planning arrangements.

Finance Act 2026 received Royal Assent on 18 March 2026, and the new rules will apply where the pension scheme member dies on or after 6 April 2027. If death occurs before that date, the current rules will continue to apply. Even if benefits are paid later.

Planning ahead

With these changes on the horizon, now is a good opportunity to review your wider estate planning arrangements.

That could include reviewing your will, checking pension expression-of-wish forms, considering estate liquidity and understanding who will administer your estate.

HMRC has also confirmed that personal representatives will generally be responsible for reporting and paying any inheritance tax due on “notional pension property”, although beneficiaries may become jointly and severally liable in certain circumstances once benefits vest in them. Further HMRC guidance, support tools and secondary legislation are expected before April 2027.

Family fun with temporary summer VAT rate. But for the hospitality businesses impacted, another set of rules to get right.

To make family days out more affordable and support businesses, the government has announced the Great British Summer Savings scheme. It means a temporary, reduced VAT rate of 5% will apply over the summer holidays. This will apply to selected activities and services for families with children. The government expects businesses to pass the VAT saving on to customers.

The temporary rate has effect for the period from 25 June 2026 to 1 September 2026 (inclusive). It applies to:

• certain supplies of children’s meals (eaten on the premises, not take-aways)

• children’s admission to theatres, cinemas, concerts, exhibitions and shows

• all admission tickets to attractions suitable for families with children, such as amusement parks, fairs, adventure parks and soft play attractions. Sports facilities will not be included.

The reduced 5% rate replaces the standard rate of VAT of 20% for supplies within scope during this period. It does not apply to activities where no VAT is charged, for instance where there is already an exemption, or where supplies are zero-rated.

Small print

It goes without saying that any business impacted will need to check the detail of the rules, and further information can be found in HMRC’s newly published ‘Revenue and Customs Brief 5 (2026): Temporary reduced rate of VAT for children’s meals, tickets and family attractions’.

Children’s meals

For the reduced rate to apply, the meal must be supplied for consumption on the premises; served from a dedicated children’s menu; and marketed, priced and presented as intended for children. It is important to be clear on what does, and does not qualify under this heading. A smaller or cheaper portion of an adult meal that is not presented as part of a children’s menu, for example, is not eligible.

The Brief also deals with how to treat a child’s meal supplied for a single inclusive price. For example, including a drink or additional courses – here the entire package can qualify for the reduced rate. Optional items, add-ons or upgrades priced separately, that do not form part of the children’s meal, are still subject to their normal VAT liability.

Bundles and mixed supplies

Where admission, meals or tickets are supplied together with other goods or services for a single price, normal VAT rules should be used to determine VAT liability. Only the part of the supply that falls within the parameters set out in the Brief is eligible for the 5% rate. Other elements fall to be treated according to their normal VAT liability.

Practical problems

Businesses will need to pivot rapidly. Updating systems and briefing staff to put the change into practice, and also to revert to normal rules when the scheme ends.

We are here to help in any way we can. Do please contact us for help with this, or any other VAT issue.

With the extension of Inheritance Tax (IHT) to most unused pension funds and pension death benefits from April 2027, IHT is very much in the public eye.

With timely advance planning, however, it is still possible to take advantage of valuable IHT exemptions. These include the annual exemption of £3,000; and the exemption for small gifts made to individuals not exceeding £250 per tax year, per recipient. And, of course, it should be remembered that gifts from one spouse or registered civil partner to another are generally fully exempt. But it is always important to get the rules right, and we look here at a recent decision from the First-tier Tax Tribunal where things did not go to plan.

Normal expenditure out of income

The exemption for normal expenditure out of income is perhaps one of the less well known exemptions from IHT. It can be available where someone makes a gift:

• that is part of their normal expenditure and

• taking one year with another, it is made out of their income, and

• after allowing for all transfers of value forming part of their normal expenditure, the giver is left with sufficient income to maintain their usual standard of living.

This was the exemption that donor, Mr Hosking, hoped would cover extensive giving to political causes he supported. Failing that, there were other arguments in his armoury. In the end, though, the gifts being challenged, totalling over £1.7 million, left him with an IHT bill of nearly £350,000.

What went wrong?

Mr Hosking ticked two of the boxes. There was no doubt that he had income significantly in excess of his personal living needs and those of his family. His donations were substantial. In addition to the gifts under discussion at the Tribunal, there were contributions to rescue Crystal Palace Football Club, gifts to heritage railways, and other gifts to charities and political causes in excess of £20 million. HMRC agreed that these gifts were made out of income, and did not impact Mr Hosking’s standard of living.

That left the question of whether gifts to various pro-Brexit causes between 2011 and 2016 were part of Mr Hosking’s ‘normal expenditure’. Had the Tribunal been given clear evidence that the giving was part of a settled pattern of expenditure, Mr Hosking might have won the day. The Tribunal was looking for signs of definite predictability or regularity in the donations over a period of time; or a prior commitment to make gifts out of future expenditure, backed up by documentary evidence. But it didn’t find them.

The Tribunal decided that though the gifts made by Mr Hosking were not ‘out of character or abnormal and in that sense were “normal expenditure”’, amounts donated varied tremendously year on year, and there appeared no settled prior commitment. For these reasons, the gifts did not fall within the meaning of normal expenditure as set out in the legislation. On this, and on other grounds, Mr Hosking’s case failed.

We can help

To benefit from this particular exemption, it is essential to be able to demonstrate a settled pattern of expenditure, measurable over a period of time or by a definite commitment to future expenditure. Do please contact us for further advice on this, or any other aspect of IHT.

Fly-by-night ‘experts’ land wholesale beer business with tax bill of over £500,000.

A company undertaking an innovative research and development (R&D) project may be able to take advantage of significant tax breaks. Unfortunately, the availability of tax relief can also attract fraudsters. A typical fraud sees rogue firms posing as specialist advisers, submitting R&D claims for their clients, and creaming off the proceeds – leaving behind a claim that may later fail HMRC scrutiny. This was what taxpayer business, Beer Express Ltd, found to its cost at the First-tier Tax Tribunal, recently.

Tax relief

R&D tax relief comes via two schemes. The new merged R&D scheme offers a 20% above-the-line taxable credit: and the enhanced R&D intensive support scheme (ERIS), available to loss-making, R&D-intensive, small and medium-sized enterprises, provides an enhanced deduction of 86%, and a potential repayable tax credit. Financially, the stakes can be high and unscrupulous so-called advisers know this.

Rogue advice

Beer Express, though primarily a wholesaler, also owns a pub, the Penny Gill, and markets products of its own, such as Penny Gill Lager and Beer. In 2020, it started two new projects, one using forecasting software to optimise its inventory, and the other to develop a new, uniquely-flavoured pale lager. Two further projects followed, one a software development project, and the other to develop its brewing offering.

The business was approached by a firm holding itself out as an R&D specialist. It suggested that the work being done would qualify for tax incentives under the R&D Guidelines. The firm was duly appointed and obtained a tax refund, paying this to Beer Express after deduction of fees.

In 2023, HMRC rejected the R&D claim in full, and asked for repayment of the refund. When Beer Express attempted to contact their ‘advisers’, the firm appeared to have disappeared.

Rules matter

Broadly speaking, to qualify as R&D for tax purposes, a project must involve the resolution of uncertainty to achieve an advance in science or technology, and fit within the rules set out in ‘Guidelines on the meaning of research and development for tax purposes’ on GOV.UK. Further specific requirements also apply, such as the need for a project to be overseen by a competent professional or person with relevant expertise. The Tribunal decided that Beer Express failed to qualify in these areas.

The Tribunal found that the company owner, although truthful and credible, did not have any in-depth knowledge of the projects: ‘Although he may have overseen the projects or had a vision for the future . . . he had not been responsible for the design, creation, planning and implementation such that he satisfied the Guidelines as a competent professional’. The company had thus failed to provide clear and cogent evidence of the advance being sought; the technical uncertainty involved; or the reason that additional research was needed. It lost its case.

Eligibility requirements for R&D for tax purposes are complex. Do please contact us for further advice.

HMRC is currently looking at claims to Business Asset Disposal Relief (BADR) made in the 2024/25 Self Assessment tax return.

What is BADR?

BADR (formerly known as Entrepreneurs’ Relief) is an important Capital Gains Tax (CGT) relief. It can be available where someone disposes of qualifying business assets, such as shares in a company. In recent years, the value of the relief has been reduced, but where conditions are met, CGT on qualifying gains is charged at a reduced rate of:

• 10% for 2024/25

• 14% for 2025/26

• 18% from 2026/27

What is HMRC doing?

HMRC has been writing to taxpayers who claimed BADR in their 2024/25 Self Assessment tax return where its data suggests that they might have exceeded the £1 million BADR lifetime limit. This could happen if someone had exceeded the lifetime limit before the claim in the return, or because the claim in the return had taken them over the limit. It is, of course, possible that the claim for BADR is correct, and does not need amendment.

Receiving a letter

HMRC routinely uses letters like these to nudge taxpayers to check their tax position, and they do not necessarily mean there is a problem. It is important, though, that letters of this type are not ignored. They do need a response within the deadline given, whatever the circumstances. Failure to act can mean that HMRC will amend a return or open an enquiry. There is also the potential for interest and penalties.

Your agents, we should receive a copy of any such letter, and will deal with it on your behalf. Please bear in mind, however, that HMRC systems are not foolproof, so if you get a letter and have any concerns, do contact us.

The proposals stand to impact profit extraction, recording and financial management for many owner-managed businesses.

Hard on the heels of the requirement for directors of close companies to report additional information on the Self Assessment tax return from 2025/26. The government is now considering further change. It is widely expected that this will mean a requirement to report transactions between close companies and their participators to HMRC.

Would this impact you?

Close companies, broadly speaking, are companies controlled by five or fewer participators. Or by any number of participators who are directors. Participators are those who have an interest in the capital or income of a company, such as a shareholder. Most small and medium-sized companies are close companies.

Why the possible change?

The small business Corporation Tax gap makes up a significant slice of the tax gap.HMRC is concerned that in close companies, the boundary between company monies, and the monies of those involved in the company is not always tightly drawn. Increased reporting requirements would give HMRC more information and help it check that transactions are taxed appropriately.

What are the proposals? 

The main risks HMRC sees are:

• under-reported income and over-claimed expenses

• error and evasion in transactions between a company and its owners.

It therefore suggests that close companies report details of transactions between the company and its participators including: cash withdrawals; loans; debts; dividends; and other distributions, and transfers of assets to and from the company. This would mean reporting the recipient; amount; and date of each transaction; and possibly also the National Insurance numbers of participators. Rules would also extend to corporate participators.

Is there anything to do now?

Company financial housekeeping, such as the operation of directors’ loan accounts, is very much a focus for HMRC at present. The current consultation highlights HMRC’s push for companies to keep records of monies passing between the company and its owners, with ‘a more structured framework’ around those records and ‘good habits around tracking the company’s money’.

Change along the lines indicated therefore seems inevitable, and will mean more demanding compliance. We can help you assess possible impact now, looking at areas such as profit extraction strategy; use of directors’ loan accounts; and the correct issue and documentation of dividends. Please contact us for further advice.

They say what you win on the swings, you lose on the roundabouts.

It certainly seems to be true of the latest changes to the rules on tax relief for employees.

The good news

There are some new tax exemptions for workplace benefits applying from 6 April 2026. The rules change so that there will be exemptions from tax where employers:

• reimburse expenses relating to accommodation, or supplies or services used in the performance of employment duties (such as homeworking equipment)

• reimburse or provide flu vaccinations directly

• reimburse employees for the cost of eye tests and corrective appliances

Previously, exemptions only applied where employers provided benefits directly, or provided a non-cash voucher to the employee so that they could pay for them. If the employee met the cost and was then reimbursed, no Income Tax or National Insurance relief was available. The new rules look to level up the treatment for tax purposes.

And the not-so-good news

On the other hand, tax relief is being scrapped for home working expenses in cases where employees are not reimbursed by their employer. This also applies from 6 April 2026.

Previously, it has been possible for employees who were not reimbursed by their employers, to claim relief from HMRC for the actual expenses incurred; or a flat rate, of £6 per week. HMRC, however, has become increasingly concerned that claims for relief have been submitted which did not comply with the rules, and this route is being withdrawn.

It is still possible for employers to choose to reimburse employees, and do so without deduction of Income Tax and National Insurance. If they don’t do so, however, it will no longer be possible for employees to claim tax relief themselves, directly from HMRC, as in the past.

Here to help

The rules on employee benefits are complex, and we are here to help. Please talk to us at any time to discuss the best way to create a tax efficient package that will help you attract the talent you need to run your business.

Businesses donating goods to charities may now benefit from new rules.

Latest position

With effect from 1 April 2026, businesses donating goods to registered charities for onward distribution to people in need; to another charity or organisation; or for use in the charity’s non-business activities will no longer be required to account for VAT on those items.

Prior to this, such donations were usually subject to VAT at 20%, as deemed supplies. This was rather the odd man out, given the existence of VAT relief for business donations of goods to a charity for sale.

The idea is to make it easier and more cost-effective for businesses to donate surplus goods to charities like foodbanks or shelters. This allows surplus items to be put to good use rather than being scrapped, or going to landfill.

Complexities

Is it good news? Yes, but not an unqualified yes. There are still a number of complexities that donor businesses must keep in mind. HMRC has recently updated VAT Notice 701/1, where section 5.5 sets out the latest guidance. In outline, goods can be donated without incurring a VAT charge when:

• goods are eligible

• they are donated for an eligible use

• they’re donated to a charity registered with the Charity Commission; or corresponding regulator (where required); or with HMRC for charity tax purposes

• the donor has evidence that eligible goods have been donated to an eligible charity.

Check the value of goods

There are per item value limits under the new rules. The cap is £200 per item for a limited range of specified items: household appliances (including cookers and fridges); furniture (including mattresses); flooring (including carpets and rugs); computers, tablets and mobile phones: and £100 in any other case. Some goods subject to excise duty (such as alcohol, tobacco and vaping products) are excluded from the scope of the relief.

Check the recipient carefully

The new relief does not apply to donations to community interest companies (CICs), social enterprises, or small charities not required to be registered with HMRC.

Get the paperwork right

Donor businesses need an appropriate audit trail. This will include written evidence from the recipient setting out its status as an eligible charity; and a signed statement from one of its officials confirming how the donation will be used. Donor businesses will also need to carry out checks and maintain records to help guard against breach of the rules. Such records are likely to include a description of goods donated and their quantity; original purchase price or value at donation; date of donation; and proof that they were dispatched to, or collected by the eligible charity.

We are on hand to help with all your VAT questions. Please don’t hesitate to get in touch.

Changes include new identity verification requirements from Companies House, under the Economic Crime and Corporate Transparency Act 2023 (ECCTA). 

Identity verification

The ECCTA makes it a legal requirement for company directors, people with significant control (PSCs), and some others to verify their identity with Companies House. Requirements are being phased in over time. At a later date, those filing for a company (such as company secretaries); limited partnerships; corporate directors of companies; and officers of corporate PSCs will also need to verify their identity. The rules will also impact limited liability partnerships (LLPs), and both individual members and corporate members. We can advise further here.

For directors and PSCs, the requirement to verify kicks in over the 12 months from 18 November 2025. It will not be possible to file the confirmation statement unless all directors have verified their identity. Continuing to act as a director or PSC without verification will constitute an offence. The company could also be in breach of the law.

Verification can be carried out online on GOV.UK One Login, or through an Authorised Corporate Service Provider. You should receive a Companies House personal code as a unique identifier when it is completed. The code is personal to you (rather than the company) and should be kept securely.

Filing accounts: latest position

Under the ECCTA, the requirement for all accounts to be filed with Companies House via commercial software was due to take effect from April 2027. So, too, were new filing requirements for micro entities and small companies, and the removal of the option to file abridged accounts.

However, change will not now take place on this timescale, and the reforms are being kept under review. A final decision is expected shortly, and companies will be given at least 21 months’ notice to get ready.

Late filing

Penalties for late filing of Corporation Tax returns have increased sharply for returns with filing dates from 1 April 2026 onwards. The size of penalty depends on how late a return is, and whether there are repeated failures to file on time. But, effectively, penalties have doubled across the board. Where a return was filed late previously, the penalty was £100: now it is £200. Where it was more than three months late previously, the penalty was £200: now it is £400.

With a consultation now underway on the introduction of prescribed formats for Corporation Tax returns, change to company admin is very much the order of the day. Get in touch below for further advice.

Creative industries are built on movement and fluidity that’s often borderless. A shoot may shift location at short notice. A tour schedule might add additional stops and air miles to the calendar. A festival run often follows a press circuit. For many creative professionals and everyone working within the industry, international travel isn’t the exception but the operating model. 

Tax residency, however, doesn’t move with the same fluidity. Tax residency rules still recognise borders and take seriously whether visits are for work or leisure. And layered on top of this: increasingly data-driven tax systems, automatic exchange of financial information between jurisdictions, and tax residency rules that rely on detailed factual patterns.

So Richard Paul sat down with Daysium, a tax compliance platform that automates day counting and record-keeping for high net worth individuals, to understand how globally mobile creatives can navigate these two worlds and stay compliant. At Nyman Libson Paul, we have spent decades advising clients across film, television, theatre and music. And Richard’s central observation is simple:

Creatives are uniquely exposed to the risks of getting travel records wrong because their lives are both global and fast-moving. But the solutions are there, and they can be simple. 

Continue reading the full interview here.

HMRC is now providing the option to pay High Income Child Benefit Charge (HICBC) through PAYE, by having your tax code adjusted, instead of needing to file a self assessment tax return.

If you are liable to pay HICBC, and there’s no other reason for you to send in a tax return, the new service will probably be the easiest way to do this. Be aware that time limits apply, and you need to act on or before 31 January in the year after the tax year for which you need to pay the charge. So, for example, if you need to pay High Income Child Benefit Charge for the tax year starting 6 April 2025, and it’s on or before 31 January 2027, you can pay through PAYE. To start the process off, you need to notify HMRC online that you want to pay through PAYE. Do this via the HMRC app, or by searching ‘Child Benefit tax charge pay charge PAYE’ on gov.uk. This then takes you to your Government Gateway login.

The process is slightly different if you already file self assessment returns, but only do so in order to pay HICBC. Here you contact HMRC by phone, and ask to leave self assessment and then register to pay
HICBC through PAYE. Both processes require you to provide specific information listed on the gov.uk page referenced above.

We are always on hand to help you steer a way through.

New process for notifying HMRC of VAT return errors.

Errors on the VAT return will now be notified online to HMRC in most cases. The old VAT652 form, previously used for this, has been withdrawn.

How to notify HMRC

The online notification process is done via your Government Gateway log-in. The form needed can be found by searching ‘Check how to tell HMRC about VAT Return errors’ on gov.uk. You will need to have the net value of the error, and total value of sales to hand.

Businesses exempt from MTD VAT will continue to notify in writing. Note, also, that taxpayers can choose to notify HMRC in writing, instead of using the online facility, if desired.

What the rules say

It’s only the notification process that’s changed. The rules on how to correct errors remain the same.
The correction process depends on the size of the error. For errors with a net value of up to £10,000; or errors between £10,000 and £50,000 and representing less than 1% of the box 6 (net outputs) in the return period in which you find the errors, you can simply correct the next VAT return. This is known as Method 1. Other errors should be notified to HMRC directly (Method 2). You can use Method 2 for errors of any size, if you prefer. Method 2 should always be used for deliberate errors.

There is a four-year time limit from the end of the accounting period to make corrections, though this does not apply to deliberate errors.

Why getting this right matters

The importance of VAT compliance cannot be overstated. It’s not just about good practice – important though that is – it can impact your business financially, too. Interest can be charged for underdeclared VAT, and there can be penalties for errors in VAT returns that result in tax being underpaid, if HMRC considers that the error was careless or deliberate.

Careless errors can attract penalties of up to 30%. Deliberate errors can attract penalties of up to 70%. Penalties for deliberate and concealed errors can be as much as 100%. HMRC has considerable discretion over what is charged, and reductions can be made for errors disclosed without HMRC prompting; and also for the amount of cooperation given by the taxpayer when a disclosure is made.

For penalty reduction purposes, note that any error that HMRC considers careless or deliberate, regardless of size, must be formally notified to HMRC: in these circumstances, correction on the VAT return alone is not enough. If you are in any doubt as to how HMRC would categorise an error, please get in touch to discuss this with us, and we can provide further details.

A note on reasonable care

What does taking reasonable care mean? HMRC defines it as taking the ‘care and attention that could be expected from a reasonable person in the circumstances’. It’s also worth noting that as far as HMRC is concerned, the opposite is also true: not taking reasonable care amounts to being ‘careless’.

Taking reasonable care will look different for each taxpayer, depending on individual circumstances and abilities, but it includes basics like keeping sufficient records to form the basis of accurate tax returns; keeping your records safe; and taking advice if there’s something you’re not sure about.

Support when it matters

Recent research by HMRC suggests that VAT can be particularly difficult for many businesses.
We can help with a VAT compliance health check to give you confidence that you are taking reasonable care, should HMRC ever come knocking.

Please don’t hesitate to get in touch below.

Changes to the availability of agricultural property relief (APR) and business property relief (BPR) are expected from 6 April 2026. This was first announced at the Autumn Budget 2024.

Original proposals and inheritance tax impact

As originally planned, the change would have significantly increased the IHT payable on the transfer of many farms and businesses. Two recent major developments, however, now look set to considerably soften the impact.

Allowance under the original proposals

Under the original proposals, the allowance for the 100% rate of relief was set at £1 million for qualifying business and agricultural assets, with 50% relief available for assets in excess of this. This was a per person limit, and not intended to be transferable between spouses and civil partners.

Revised allowance and transferability between spouses

The position has now changed significantly, with the allowance for the 100% rate of relief increasing to £2.5 million and becoming transferable between spouses and civil partners. Any unused £2.5 million allowance on the death of a spouse or civil partner will be transferable to a surviving spouse or civil partner.

What this means in practice

This means that overall, a couple will be able to pass on up to £5 million of qualifying agricultural or business assets between them, without paying IHT, on top of the existing allowances, such as the nil rate band.

Next steps

Our team can review your circumstances and explain how the revised APR and BPR changes may apply to you. Click below to get in touch with us.

The Finance Bill 2025-26 has now been published, with the following changes to Charity Compliance rules.

Previously, legacies received by Charities or CASCs were not treated as ‘attributable income’ and therefore benefited from generous inheritance tax relief without associated spending restrictions. Under the new legislation, legacies will be classified within the ‘attributable income definition’, meaning that the funds must be spent on the Charity’s charitable purposes. Failure to do so may result in a tax charge.

There are 12 investment types that the government recognises for charitable tax reliefs. Previously, one category was subject to a statutory anti-avoidance requirement (that the investment must not be made for anti-avoidance purposes). The requirements will now apply to all 12 investment categories.

The revised tainted donations rules previously considered solely the motivation or intent of the donor when determining whether a donation was tainted. The rules have now broadened to also consider the outcome of the transaction, has the donor received a financial benefit regardless of their stated or subjective motivation. The bar for establishing whether a transaction is tainted has also been lowered, with the test of ‘financial advantage’ being replaced by ‘financial assistance.’

HMRC is also updating its guidance to bolster its enforcement powers. Whilst the majority of charities meet their tax obligations, there is a minority that persistently fail to comply but still claim tax relief, such as Gift Aid. HMRC are working on changes to guidance that will improve HMRC’s powers to compel compliance through sanctioning trustees and charity managers.

The new measures will take effect for transactions that occur on or after 6 April 2026.

Further information: Legislation to introduce changes to charity tax rules – GOV.UK

Following the Upper Tribunal ruling on the Yorkshire Agricultural Society case, HMRC has broadened the scope of VAT relief for fundraising events. Whilst fundraising still needs to be a ‘primary purpose,’ it no longer needs to be just the ‘primary purpose.’ Where an organisation has two primary purposes that cannot be separated in importance, the exemption can still apply. This is provided that one of those purposes is fundraising, as in the case of the Yorkshire Agricultural Society, where the aims were to fundraise and to educate.

Looking forward, this will provide charities with greater flexibility when planning events. In particular where events may also look to serve other goals of the charity. However, charities should note HMRC’s comments on the primary purpose following the ruling:

The event must still therefore be promoted as a fundraising event. HMRC acknowledge this may not be its sole purpose.

Following the ruling, there may be scope to claim a refund for events held in the last 4 years. Where applicable, charities should apply the court decision. Then review HMRC’s guidance to determine if there have been any overpayments of VAT.

Further information: Click here and here

Inheritance Tax (IHT) net set to widen.

From 6 April 2026, changes announced last year will radically overhaul two key IHT reliefs: business property relief (BPR) and agricultural property relief (APR).

The real game changer is the significant restriction of 100% relief on qualifying agricultural and relevant business property in estates or settlements (trusts). Currently, relief is unlimited, but the new rules will introduce a £1 million allowance that effectively caps the relief available. The outworking will be that many more people will now need to fund an IHT liability in the future.

In outline:
The new £1 million allowance will apply to the combined value of business and agricultural assets in an estate qualifying for 100% BPR and/or 100% APR.
The £1 million allowance will also apply to the combined value of relievable agricultural and business property in trusts.
Any qualifying relievable property above £1 million will attract relief at a lower rate of 50%, and the £1 million allowance will rise with inflation from 6 April 2030.

Advance planning will become key, to ensure maximum use is made of each individual limit. The changes will need consideration alongside other IHT rules, like those on lifetime gifting; and an assessment of how IHT interacts with other taxes. You should also consider how to pay any future tax liability on death. Some business owners may accelerate passing assets to the next generation or restructure business ownership and operations.

We appreciate that these decisions may involve a major reorientation in outlook, and could require especially sensitive handling. While last-minute adjustments are possible, these new rules are now expected, so plans should be made accordingly.

From 6 April 2027, further IHT changes will bring unused pension funds and death benefits into its scope. These changes may also require planning, especially for those with significant pension savings. Again, we can advise on the options that may be available.

Bespoke advice is always recommended, so please do contact us to discuss what these changes may mean for you.

Under new rules, more pensioners are now eligible for the Winter Fuel Payment in England, Wales, and Northern Ireland. In Scotland, eligibility has also widened for the Pension Age Winter Heating Payment.

Where taxable income is more than £35,000, however, HMRC will seek to recover any payment received. Recovery will be made by adjusting the 2026/27 tax code, or via the Income Tax self assessment tax return for 2025/26. For many people, these additional processes may be an unwelcome inconvenience.

As payments are usually made automatically to those eligible, you have to opt out of payment to avoid the payment and claw back process. Deadlines apply for the opt-out process but have now passed for this year in all parts of the UK. This unfortunately means that without a last-minute change from HMRC, anyone who has not already opted out will enter the winter 2025/26 payment and recovery cycle.

As regards the future, the first year you can now opt out of is 2026/27. If you live in England, Wales or Northern Ireland, you will be able to opt out for 2026/27 and subsequent years from 1 April 2026. If you live in Scotland, you can apply to opt out now, using an online form accessed via mygov.scot. This, however, will only impact payment from winter 2026/27 onwards.

HMRC presses on with roll-out of Making Tax Digital for Income Tax (MTD IT) – but changes plans for Corporation Tax.

MTD IT is now well on the horizon, with updated draft legislation published over the summer. Significantly, HMRC also published a Transformation Roadmap, underscoring the fact that digital self-serve is very much the direction of travel. According to this document, ‘HMRC will look very different by 2030. Almost all straightforward customer queries will be handled digitally or automatically. At least 90% of customer interactions expected to be digital’.

MTD and Corporation Tax

The surprise announcement over the summer was that plans to introduce MTD for Corporation Tax had been abandoned. But this doesn’t mean that there’s going to be no change for the Corporation Tax population. Though there’s no current Plan B for MTD for Corporation Tax, other comments in HMRC’s Transformation Roadmap suggest things will unlikely stand still.

The Roadmap says: ‘HMRC will modernise services for Corporation Tax, beginning with a renewal of internal systems for Corporation Tax to provide the foundation for future improvements . . . developing an approach to the future administration of Corporation Tax that is suited to the varying needs of the diverse Corporation Tax population.’

‘HMRC recognises that this population includes a wide range of entities and situations. From small businesses to multinationals, from charities and property management companies to unincorporated associations. HMRC will work with stakeholders to identify changes that provide the best outcomes . . . and is committed to consult and provide early clarity and assurance on both the design and timing of changes.’

Helping with digital compliance

HMRC’s new world focuses on digital compliance, which will inevitably challenge taxpayers. We are on hand to advise on the best way ahead for you and your business. Please don’t hesitate to contact us with any queries you may have.

It may not be as straightforward as you think. 

When is a volunteer not a volunteer? When they’re a worker as regards employment status?

It’s a question that the Court of Appeal will be considering later this year, when it reviews the case of Coastal Rescue Officer, Mr Groom.

Mr Groom volunteered for many years for the Coastal Rescue Service (CRS). The relationship unravelled when Mr Groom was subject to disciplinary activity, and asked to be accompanied by a trade union representative to the disciplinary hearing. Mr Groom was turned down because the right would only apply if he was a worker. The case ended up at the Employment Appeal Tribunal (EAT).

Not the label that matters

It’s not always appreciated that in law, there is no such thing as volunteer status. What matters isn’t the label, but the legal status behind it. Depending on the exact details of the individual arrangement, there’s a possibility that someone described as a ‘volunteer’ could, be held to be a worker, or an employee for employment status purposes. Both types of status carry significant employee rights and employer responsibilities, such as minimum wage and entitlement to paid holidays.

Check the reality

One of the defining features of a worker is working under a contract. In this particular case, the CRS argued that there was no contract. Its handbook for volunteers said that the relationship was a ‘voluntary two-way commitment where no contract of employment exists’.

The EAT, however, looked at the reality underlying all this. It noted that Mr Groom worked under a Volunteer Agreement. This sets out minimum levels of attendance at training and incidents, and expectations to uphold the CRS’ professional reputation. But what made the critical difference was the issue of payment.

Though many of Mr Groom’s activities were unpaid, he was entitled to submit monthly claims for payment for others. The volunteer Code of Conduct stated that such payment was ‘to cover minor costs caused by your volunteering, and to compensate for any disruption to your personal life and employment and for unsocial hours call-outs’. Submitting claims is optional, and it was noted that some volunteers chose not to claim.

Take-away message

The decision doesn’t mean that every volunteer is to be classed as a worker. Even for Mr Groom, the question of whether worker status applied for unpaid activities was left to be decided at another time. Nevertheless, anyone using volunteers – or offering work experience or internships – will want to be sure they don’t run the risk of their arrangements being classified as conferring worker or employee status. The Court of Appeal’s verdict will be important to watch. 

Businesses have been given more time to prepare for the change to compulsory Payrolling Benefits in Kind. The start date has been moved from April 2026 to April 2027.

What Employers Need to Know

From April 2027, most benefits in kind must be reported under Real Time Information (RTI) and employers will also need to pay Income Tax and Class 1A National Insurance contributions (NICs) during the tax year.

To make this possible, HMRC will expand the number of RTI data fields. These extra fields will hold data that is currently reported in forms P11D and P11D(b).

Some benefits are not yet included in mandatory payrolling. Employment-related loans and accommodation remain outside the rules for now. For these, the P11D and P11D(b) process will continue temporarily, however, employers can choose to payroll them voluntarily.

To payroll benefits voluntarily for the 2026/27 tax year, you must register in advance. For the tax year starting 6 April 2027, registration will be open from November 2026 to 5 April 2027.

How Benefits Will Be Calculated

The taxable value of a benefit in kind will be calculated as follows:
• Take the annual cash equivalent of the benefit.
• Divide it by the number of relevant pay periods for each employee.
• The resulting figure will be liable to Income Tax and Class 1A NICs each pay period.
• Employers must report this figure alongside employee earnings in each period.
If the value of a benefit is not known at the start of the year, employers must use a reasonable estimate.

HMRC’s Further Guidance

HMRC has highlighted specific situations:
• Globally mobile employees within modified PAYE arrangements: HMRC is considering keeping the P11D and P11D(b) processes for these cases.
• Employees and directors receiving no income: Employers will still need to provide details of benefits in kind and expenses via an FPS. Class 1A NICs will be due in the same way as for employees with income. The FPS will show no payments of earnings and no tax paid. Any uncollected tax will be recovered through the P800 reconciliation process, simple assessment, or self assessment.

What Employees Should Expect

For employees, the change means tax on benefits will move into real time. Employers will need to explain this clearly to staff. In the first year of mandation, some employees could face a cash flow impact if they are already paying tax on benefits from a previous year.

Next Steps for Employers

More information is expected from Autumn 2025 onwards. In the meantime, it may be worth considering voluntary payrolling of benefits in 2026/27. This would give businesses a chance to test the system before it becomes compulsory. Advance registration is required for voluntary payrolling.

We are happy to advise on voluntary payrolling or any other steps you need to take to prepare for the change.

Despite last-minute delays in the past, there is a confidence that this time MTD IT really will happen. High-level contact with HMRC by the tax and accountancy professional bodies tends to confirm this, and with MTD IT expected to reduce error and help close the tax gap, it seems highly unlikely that the government will back down now. Another strong driver is the fact that MTD IT sits on HMRC’s new Enterprise Tax Management Platform, and moving taxpayer data onto this platform is fundamental to modernising HMRC’s own digital systems.

What’s involved: MTD IT has three key components:

• keeping digital accounting records
• filing updates with HMRC every quarter, summarising business income and expenses. Updates must flow directly to HMRC from the digital records without manual input
• an end of year finalisation process.

Who is impacted and when: From April 2026, MTD IT will be mandatory for self-employed individuals and landlords, with what’s called gross qualifying income of more than £50,000 from those sources.

From April 2027, it will be mandatory where such income is more than £30,000, and from April 2028 for those with income more than £20,000.  

Not yet in scope: Partnerships are expected to come into MTD IT at a later (unspecified) date.

Exemptions and deferrals: Limited exemptions apply either automatically or with notification to HMRC; we can help you ascertain if any of these apply to you. In addition, certain taxpayers will have a deferred entry to MTD. These include individuals who submit the residence/remittance basis pages with their tax return (SA109), who will not be required to join MTD IT until April 2027.    

Moving ahead: MTD IT is a major change. It impacts the way you interact with HMRC, and how often you interact with HMRC. It also revolutionises the yearly timetable for accounts preparation. The scale of the change can’t be over emphasised, and it will be wise to start making some key decisions now.

If MTD IT is going to apply to you, we will be in touch to discuss what’s needed in more detail. We can also talk through the options for record keeping, and quarterly filing, so you can decide how much input you would like us to have, and how much you want to tackle yourself. We look forward to working with you to find the MTD IT solution that’s right for you.

The government has announced changes that could be good news if you have a side hustle. Whether you make extra money through eBay sales, dog walking, or creating content online, the rules are shifting, particularly when it comes to side hustle tax.

But when it comes to tax, there’s always some fine print. Not needing to file a tax return doesn’t mean you won’t have tax to pay. Understanding side hustle tax is essential as there are two allowances of £1,000 each, which apply to trading and property income. Any side hustle income above this level is likely to be taxable, so being aware of your side hustle tax obligations is crucial.

Here’s what’s changing: the Income Tax self-assessment reporting threshold for trading income will rise from £1,000 to £3,000. This hasn’t come into effect yet, but the plan is clear, providing more clarity around side hustle tax requirements.

HMRC expects 300,000 people will no longer need to file a tax return. However, around 210,000 of them may still need to pay tax. To make this easier, HMRC is preparing a new online service for people to pay what they owe without filing a full return.