Tax update August 2026

The Government will present the next Budget on Wednesday 28 October.

This will be the third Budget of this Parliament, but the first for the current PM and Chancellor.

The Budget and Parliament - UK Parliament

HMRC has created an online form which can be used by agents and taxpayers if they wish to disagree with a correction notice.

Revenue correction notices are issued when HMRC identifies what it believes to be missing information or an error in a tax return. Until now, if the taxpayer believed that the notice was incorrect then the only methods of challenge were by post or phone, so this new online portal will streamline the process.

The form will require a reason for the disagreement to be given.

Disagree with a revenue correction notice - GOV.UK

From September, HMRC will begin to register taxpayers for making tax digital for income tax (MTD for IT) if it believes they should have already registered but have not.

The first tranche of taxpayers for whom making tax digital for income tax is compulsory were due to make their first quarterly filing by 7 August. HMRC is attempting to register those who it believes were due to register but have not yet done so. HMRC’s records are however based on historic tax return data so in some cases may not correctly reflect an MTD obligation. Taxpayers should also be aware that if they have an agent they will not receive a copy of the communication.

HMRC to start signing up taxpayers who have not registered themselves for MTD | The Association of Taxation Technicians

HMRC has created a new online portal, which can be used by taxpayers undergoing a compliance check to send documents to HMRC.

The portal can be used by a taxpayer or their agent. There are limits on the number, size, and format of files. Taxpayers can still respond by post if they prefer.

New online service for uploading documents during HMRC compliance checks | The Association of Taxation Technicians

The UT has found for HMRC that a loan had been written off, overturning an FTT decision.

When a close company ‘releases or writes off’ a loan to a participator, the borrower is subject to a savings and investment income tax charge on the amount released or written off under Chapter 6 of Part 3 of ITTOIA, the tax charging provision at point in this case. Similarly, employment income tax may be charged: (1) on general earnings, or under the benefits code, when an employment-related loan is released or written off; or (2) when an obligation to pay up or pay deferred consideration for employment-related securities is released. There is no statutory definition of ‘writes off’ for these purposes and this UT decision helpfully considers the meaning of these words.

The taxpayer was sole director of a company that went through the voluntary winding-up process with an overdrawn director’s loan account. He made some repayments, but there remained a balance outstanding when the liquidator delivered his final account and the company was dissolved. The liquidator was not expecting further repayments, though he had not formally released the director from the obligation to repay.

HMRC took the view (in line with its published guidance) that the outstanding balance should have been declared by the taxpayer on his return, as it was effectively written off. The taxpayer contended that it was not taxable, as the liquidator could restore the company and pursue the shortfall should the director become able to repay more than he already had. For this reason (in effect) the FTT found that the loan had not been written-off.

HMRC appealed to the UT, and won. The UT accepted that there was no formal release of the loan, but interpreted "writes off " more broadly than the FTT (following case law about similar provisions in earlier legislation), finding that here the company (acting by its liquidator) wrote off the loan when the liquidator’s final report concluded that there was no recoverable value in the loan for the company’s creditors, regardless of the (remote) possibility that further steps might be taken subsequently to recover the balance. The applicable legislation had an anti-avoidance purpose, which supported the UT’s finding that it applied here, where it was plain that the liquidator was unlikely to recover the loan balance.

HMRC v Quillan [2026] UKUT 300 (TCC)

Revenue and Customs v Quillan (INCOME TAX - s.415 Income Tax (Trading and Other Income) Act 2005 - whether director's loan account was "written off" - in which year did the write-off occur) [2026] UKUT 300 (TCC) (06 August 2026)

The CA agreed with the UT that a promissory note given by the deceased could be deducted from the value of the estate. This meant that the scheme under which she had remained in her home, which had technically been transferred to a trust, was valid for IHT.

The taxpayer sold her home to the trustees of a trust called the life settlement. She had an interest in possession (IIP) in this trust. In exchange, she received a promissory note. She then assigned the note to another trust, the family settlement. She was excluded from benefitting under this trust, in which her three children had IIPs. She remained living in the property rent-free until her death.

The intention of the scheme was that the assignment of the note was a potentially exempt transfer, and she did in fact survive more than seven years after that transfer. The estate was calculated with the property being deemed to form part of her estate under her IIP in the life settlement, but with a deduction for the value of the note, which was worth the same as the property had been at the time of transfer.

HMRC’s position was that there should be no deduction from the value of the deceased’s interest in the property for the value of the note, or alternatively that the note should be part of her estate for IHT.

At the CA, HMRC tried to argue that the IOU did not reduce the value of the estate, as it was derived from property held by the taxpayer at the time of her death. The CA found that although the trust debts were part of her estate, the debt should not be treated as one she had incurred, so it was not caught by the anti-avoidance provisions. HMRC also appealed on the grounds that the scheme should be considered ineffective under the Ramsey rule of statutory interpretation. The court dismissed that, noting that HMRC had not demonstrated a construction of the legislation that could support its case.

The judge noted that the scheme was implemented before the DOTAS and GAAR rules came into force, so as well as the legislative changes since then those could now be used to counteract schemes of this type.

Elborne & Ors v HMRC [2026] WLR(D) 381, [2026] EWCA Civ 894

Elborne & Ors v The Commissioners for HMRC [2026] EWCA Civ 894 (13 July 2026)

The UT has agreed with the FTT that serviced offices were held as an investment, so business property relief (BPR) was not available.

The late taxpayer held shares in a holding company whose subsidiary owned an office block. From 2010, four of the six floors in the office block were let as serviced offices, while the other two floors were let on commercial leases to tenants for shops and offices. The serviced offices were managed by another company under a serviced office management agreement. Income from clients was split into two separate fees. Facility fees were charged to cover the use of the offices, and additional services were charged separately under a ‘contract services fee’. Both parties agreed that the facility fee characterisation would tip the balance, as it accounted for a significant proportion of the company’s income.

The executors contended that the taxpayer’s shares were eligible for BPR as this provision of serviced offices was a trading activity, not investment.

The FTT found that BPR was not available.

The executors appealed to the UT, who agreed with the FTT that the fundamental part of what clients acquired was the right to use a specific room in the property, and the facility fee predominantly related to floor space. The UT did remake the decision based on finding that the aspect of the facility fee relating to the supply of utilities like heating was not an investment management activity. However, this was not a sufficiently material aspect of the package to alter the character of what was provided. The business as a whole was mainly one of making or holding investments. No BPR was available.

The Executors of Keith Denis Lewis Beresford (Deceased) v HMRC [2026] UKUT 285 (TCC)

The Executors of Keith Denis Lewis Beresford (Deceased) v Revenue and Customs (Inheritance tax - business property relief - s.105(3) IHTA 1984 - shares in a company - whether the business carried on by the company consisted wholly or mainly of making or holding investments) [2026] UKUT 285 (TCC) (29 July 2026)

The UT has agreed with the FTT that ‘life’ in the IHT legislation can refer both to human life, for an individual settlor, and live companies for corporate settlors.

The taxpayer, a company, established a remuneration trust in 2005. A decennial charge therefore arose in 2015 and HMRC issued a notice of determination in 2020.

The taxpayer appealed, on the grounds that the legislation refers to life, and as a company it was not alive. The wording is:

(d) where the transfer is made during the life of the settlor and the trustees are not for the time being resident in the United Kingdom, the settlor.

The FTT was referred to a dictionary which defined life as:

"Life noun (Time alive): The period between birth and death, or the experience or state of being alive

Life noun (Time of operation): The period for which a machine or organization lasts."

The FTT dismissed the argument that ‘life’ should take its ordinary meaning as the period between birth and death of a living thing. The legislation was clearly intended to cover both individual and corporate settlors, so the reference to life should not be read as purely to human life, but also to ‘live’ companies, being those on the register.

The UT dismissed the taxpayer's appeal, finding that despite provisions of the IHT acts that deal with close companies making it explicit where a company has a liability for IHT, this did not affect the outcome of this case.

Lexgreen Services Ltd v HMRC [2026] UKUT 289 (TCC)

Lexgreen Services Ltd v Revenue and Customs (INHERITANCE TAX - secondary liability of settlor for inheritance tax under s.201 Inheritance Tax Act 1984 where a chargeable transfer is made "during the life of the settlor" - whether this includes a corporate settlor) [2026] UKUT 289 (TCC) (31 July 2026)

In the latest loan contractor scheme case, the FTT has found that loans from Isle of Man structures should be taxable as employment income.

The taxpayer became an employee of a partnership under an arrangement where he received a minimum wage salary, but also payments (structured as loans) from a trust which were much greater. The clients he was contracted out to, paid the partnership for his services. The trust loans he received were ultimately funded from these payments. The loans were written off in the trust accounts, and the FTT found that there was no intention to make the taxpayer repay them.

The FTT found that the payments from the trust were unconditional rather than loans and earnings from the taxpayer’s employment and so taxable as employment income, and the resulting discovery assessment was valid, i.e., the tax avoidance scheme which the taxpayer used was not effective.

Bates v HMRC [2026] UKFTT 1135 (TC)

Bates v Revenue and Customs (INCOME TAX - loan contractor scheme - were sums "lent" to the appellant taxable on him as employment income?) [2026] UKFTT 1135 (TC) (05 August 2026)

HMRC has published new Guidelines for Compliance (GfC19) aimed at helping employers manage the UK tax and National Insurance obligations arising when overseas employees undertake duties in the UK on a short-term basis. The guidance is intended to support businesses in applying the rules correctly, maintaining appropriate records, and reducing the risk of compliance failures and penalties.

The guidance covers the key UK tax and National Insurance issues that can arise when overseas employees work in the UK, including the operation of PAYE, the interaction with double tax treaties, record-keeping requirements and common compliance errors. It also outlines HMRC's expectations around governance and documentation, providing practical guidance to help employers apply the rules correctly and demonstrate compliance where required.

Businesses should use the guidance as an opportunity to review their existing short-term business visitor processes and controls against HMRC's guidelines. Ensuring processes are aligned with HMRC best practice can help reduce compliance risk and provide greater confidence in the event of an HMRC enquiry.

Help with short-term business visitors — GfC19 - GOV.UK

The SC considered the extent to which findings in a Group Litigation Order (GLO) test case bind other claimants when later authority shows the earlier legal reasoning to be wrong.

The taxpayer was one of many claimants in the long-running CFC and Dividend Group Litigation, which concerned claims that aspects of the UK corporation tax regime were contrary to EU law. A Prudential claim had been selected as the test case, and issues determined in that case were intended to bind other claimants within the GLO framework.

The set off issue concerned whether AXA could recover compensation for the loss of use of money where tax had been paid prematurely and later set against a tax liability. AXA argued that this issue had already been decided in favour of taxpayers in the Prudential test case. The SC accepted that Prudential had determined the issue for the purposes of the GLO. However, it held that this was one of the rare cases where the court could depart from an earlier GLO determination because later decisions had shown the legal basis of the Prudential ruling to be wrong. AXA was therefore unable to rely on that earlier decision.

The limitation issue concerned whether AXA could rely on a longer period for bringing its claim on the basis that the mistake only became apparent after later court decisions. AXA argued that the Prudential had already established when that time period began. The SC disagreed, holding that Prudential had never actually decided that question as a binding GLO issue. As a result, AXA could not treat the point as settled in its favour and instead had to rely on the current legal test, under which time starts when a claimant could reasonably have recognised that it had a worthwhile claim.

The decision confirms that GLO determinations are generally binding, but not absolutely so. A court will depart from them only exceptionally, and only where later authority clearly establishes that the earlier legal basis was wrong. It also underlines the need to identify precisely what a test case actually decided: not every observation in a lead judgment becomes a binding GLO determination.

Axa Insurance Plc v Commissioners of Inland Revenue [2026] UKSC 24

AXA Insurance UK PLC and another v Commissioners of Inland Revenue and another [2026] UKSC 24 (27 July 2026)

Business rates for pubs, clubs and live music events are set to be cut by 20% from April 2027 in the Government’s attempt to build the economy.

The very largest live music venues will not benefit from this reduction, with more details on the measure set to be announced during the Budget later this year.

Burnham means business: PM slashes business rates bills for pubs, clubs and live music venues - GOV.UK

The FTT held that the taxpayer was entitled to 100% first year allowances on oilfield facilities acquired from BP. Although a minority interest in the assets was sold shortly afterwards, the Tribunal found that the arrangements were commercially driven and the anti-avoidance provisions did not apply.

The FTT held that the taxpayer was entitled to 100% first year allowances on oilfield facilities acquired from BP. Although the taxpayer sold a minority interest in the assets to a third party six days later and made a Section 198 election fixing the disposal value at US$2, the Tribunal found that the arrangements were driven by commercial objectives rather than tax avoidance.

The taxpayer became the legal and beneficial owner of the assets on acquisition and used them in its ring fence trade throughout its ownership period. The Tribunal concluded that neither the ring fence trade anti-avoidance rules nor the tax-motivated arrangements provisions applied, as the transaction with the third party was intended to avoid a dispute and enable the wider BP acquisition to proceed.

The decision confirms that a short period of ownership will not necessarily prevent a claim to first year allowances where the statutory conditions are satisfied and the arrangements have a genuine commercial purpose.

Perenco UK Ltd v HM Revenue & Customs [2026] UKFTT 1096 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1096.html

The FTT found that a Bermuda company was centrally managed and controlled in the UK and therefore fell within the scope of UK corporation tax.

The company was registered in Bermuda, where the directors also resided. It was owned by a family trust of which Mr Ciardi, a UK resident, was the settlor and beneficiary.

The Tribunal carried out a detailed review and concluded that the Bermuda-based directors’ roles were largely formalistic, with real decision-making occurring in the UK.

It noted that the Bermuda directors did not exercise independent judgement and routinely implemented decisions already made by Mr Ciardi, signed accounts without reviewing them and sought Mr Ciardi’s approval for matters legally within their remit.

Penalties issued by HMRC were upheld, however the Tribunal re-categorised these as careless and not deliberate. A personal liability notice (PLN) was also issued to Mr Ciardi, as an individual who acted as a UK shadow director, however these were found to be invalid on the basis deliberate behaviour was not established.

Cogefin (Bermuda) Limited & Anor v HMRC [2026] UKFTT 1108 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1108.html

The UT has upheld the FTT's decision that capital allowances were not available in respect of ships leased under a structured financing arrangement involving companies within the tonnage tax regime.

The case concerned the application of the de-risked leasing rules. The taxpayers acquired ships and leased them through an intermediate bank-owned entity to operating companies within the tonnage tax regime, while seeking to retain entitlement to capital allowances.

The Tribunal found that the structure substantially reduced the lessors' exposure to non-compliance risk by replacing shipping company credit risk with bank credit risk and by incorporating extensive security arrangements, including a bank guarantee. As a result, the arrangements fell within the statutory restrictions denying capital allowances for de-risked leases.

The taxpayers argued that the guarantee qualified as an excepted form of security and that the risk reduction had been measured incorrectly. The Tribunal rejected all grounds of appeal and confirmed that the arrangements removed the greater part of the relevant risk, engaging the de-risked leasing provisions.

This decision reinforces the purposive approach being taken by the courts. Where financing structures materially de-risk a lessor's exposure, capital allowances may be denied even if the arrangements are commercially driven and carefully documented.

FC Shipping Ltd v HM Revenue & Customs [2026] UKUT 305 (TCC)

www.bailii.org/uk/cases/UKUT/TCC/2026/305.html

The FTT has ruled that a care home that developed and implemented a package of measures to protect vulnerable residents during the covid pandemic, although responding creatively to unprecedented challenges, did not meet the requirements for R&D tax relief.

The taxpayer, a care home operator, submitted an R&D claim relating to a single project entitled ‘Managing outbreaks and effects of a global pandemic in a residential care home’. It argued that the project involved the development of a coordinated system of infection-control measures, including PPE requirements, testing regimes, visitor controls, resident cohorting, enhanced cleaning procedures, social distancing, staff segregation, track-and-trace arrangements and vaccination programmes.

Whilst recognising that the taxpayer had acted in a diligent, innovative and proactive manner, the FTT agreed with HMRC that the statutory requirements for R&D relief had not been met. The Tribunal accepted that, in principle, the definition of R&D can extend to projects involving uncertainty arising from the interaction of known measures and processes. However, it concluded that, in this case, the taxpayer was adapting existing scientific knowledge and public health guidance to the specific circumstances of its care homes, rather than seeking to achieve an advance in overall scientific or technological knowledge or capability.

The decision serves as a useful reminder that innovative operational problem-solving, however valuable commercially, will not qualify for R&D relief unless it is directed at achieving an overall advance in science or technology.

Tanglewood Care Services Ltd v HM Revenue & Customs [2026] UKFTT 1137 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1137.html

The UT has dismissed a taxpayer's appeal and upheld HMRC's denial of input tax under the Kittel principle. The central issue was whether the taxpayer knew, or should have known, that transactions were connected with VAT fraud.

The taxpayer, a recruitment business using outsourced payroll providers, was denied input VAT recovery after HMRC argued that the providers were connected to VAT fraud. HMRC also issued penalties and personal liability notices to the director.

The FTT found that, although the taxpayer did not have actual knowledge of the fraud, it should have known of the connection based on inadequate due diligence, repeated dealings with fraudulent counterparties and the director's awareness of VAT fraud risks.

The UT upheld that decision. It confirmed that the Kittel test remains whether a taxpayer "knew or should have known" that a transaction was linked to VAT fraud. It also clarified that the Mobilx formulation, where fraud is the "only reasonable explanation" for the facts, is not a separate test but simply a means of establishing constructive knowledge.

The decision reinforces that HMRC does not need to prove dishonesty or actual knowledge to deny input VAT recovery. In higher-risk sectors, persistent failures to carry out basic due diligence may be enough to establish constructive knowledge of VAT fraud.

Opus Labour Services Ltd v HM Revenue & Customs [2026] UKUT 00275 (TCC)

www.bailii.org/uk/cases/UKUT/TCC/2026/275.html

The UT has held that construction costs relating to the accommodation wing of a secure adolescent mental health facility did not qualify for zero-rating. Although the wing contained bedrooms and residential facilities, it formed part of a hospital or similar institution and was therefore excluded from qualifying as a building used for ‘relevant residential purpose’.

The case concerned construction costs for a medium-secure mental health facility for young people, many detained under court orders or mental health legislation. The taxpayer argued that the bedroom wing should be treated separately and qualify for zero-rating as it was intended solely for a relevant residential purpose. HMRC contended that it formed part of a hospital or similar institution and was excluded from relief.

The UT dismissed the appeal. Although it accepted that the bedroom wing could be viewed as a distinct part of the building, it found that the accommodation areas were integral to the facility’s treatment regime. Clinical care, nursing observation and medication management continued throughout these areas, meaning they were not used solely for a relevant residential purpose.

The decision confirms that zero-rating can apply to part of a building, but only where that part is used exclusively for a qualifying relevant residential purpose. Accommodation within a treatment facility is unlikely to qualify where it forms part of ongoing medical care.

NHS Ayrshire & Arran Health Board v HM Revenue & Customs [2026] UKUT 258 (TCC)

www.bailii.org/uk/cases/UKUT/TCC/2026/258.html

Following the decision in Isle of Wight NHS Trust v HMRC [2025] UKFTT 1114 (TC), HMRC has published an update and now accepts that the supply of temporary medical staff (locum doctors) may be exempt from VAT.

The exemption only applies to locum doctors that are registered with the General Medical Council (GMC) and who perform medical services in that professional capacity. Other healthcare professionals or general staffing services do not fall within the exemption.

HMRC explains that businesses can now claim a refund of overdeclared output VAT, relating to supplies made in the prior four years. Each claim will be reviewed on a case-by-case basis and HMRC has said ‘this will include consideration of unjust enrichment, partial exemption and whether overdeclared VAT has been correctly accounted for across the supply chain’.

Revenue and Customs Brief 6 (2026): VAT liability of the supply of temporary medical staff (locum doctors) - GOV.UK

The FTT struck out the taxpayer’s appeal on the basis no ‘conclusion date’ had occurred and therefore the taxpayer was unable to bring an appeal.

HMRC had compulsorily registered the taxpayer for VAT and raised assessments and penalties in 2018 in excess of £1m.

The taxpayer was given two options if they disagreed with HMRC’s decision. Firstly, they could ‘ask for a HMRC officer not previously involved in the matter to review the decision’ and secondly, they could ‘appeal to an independent tribunal to decide the matter’. The taxpayer’s agent responded to HMRC and requested that the case was reviewed. The Tribunal agreed that the letter sent by the taxpayer’s agent ‘constituted a valid request for a review’.

The taxpayer argued that their appeal was ‘in time’ because in the absence of a conclusion date, the 30-day time limit for appeal was never triggered. Whilst HMRC accepted that a request for review was made by the taxpayer, which they failed to carry out and issue a decision, HMRC argued that the ‘failure to complete the review does not result in an indefinite suspension of the time limit for bringing an appeal’.

The FTT therefore struck out the appeal on the basis it was made prematurely before the conclusion date, but added that it expects HMRC to take steps to comply with its statutory obligations regarding the appellant’s original request for a review. This does not prevent the taxpayer from bringing a future appeal once HMRC has carried out its review and a conclusion date has occurred.

Foy Wealth Limited v HMRC [2026] UKFTT 1061 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1061.html

The FTT found that the taxpayer only "should have known" its transactions were linked to VAT fraud after receiving an HMRC tax-loss letter in June 2020 and failing to carry out further checks.

In the second case this month considering the “should have known” test, the taxpayer, a construction subcontractor, used labour suppliers between 2019 and 2022 that later defaulted on their VAT obligations. HMRC argued the transactions were connected to VAT fraud and, under the Kittel principle, denied input tax recovery, assessed VAT, imposed penalties, made the director personally liable, and deregistered the company.

The Tribunal agreed that the transactions were linked to fraud but found that the taxpayer did not know, and could not reasonably have known, of the fraud initially. However, after receiving an HMRC tax-loss letter in June 2020, the taxpayer was on notice of potential fraud and should have carried out enhanced due diligence. By failing to do so, it "should have known" that subsequent transactions were connected with VAT fraud from 24 June 2020 onwards.

As a result, the VAT assessment, input tax denial and penalties were reduced to cover only the later period, although VAT deregistration was upheld. The key point from the decision is that a business's duty to investigate may arise once HMRC has specifically alerted it to potential VAT fraud, significantly raising the expected standard of due diligence.

A & A Contractors Midlands Ltd v HM Revenue & Customs [2026] UKFTT 1093 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1093.html

The FTT has held that carpet retailer was not making supplies of flooring fitting services to customers and therefore was not liable to account for VAT on fitting fees paid directly to independent fitters.

Customers purchasing flooring could either arrange installation themselves or pay a separate fee for the retailer to arrange fitting through a network of independent installers. Customers paid the fitting arrangement fee to the retailer, while the fitting charge itself was paid directly to the fitter. HMRC argued that the fitters supplied their services to the retailer, which then made an onward supply of fitting services to customers.

The Tribunal found that the retailer acted as a disclosed agent when arranging fitting services and that the independent fitters supplied the installation services directly to customers.

In reaching its decision, the Tribunal noted that customers paid fitters directly, fitters were free to accept or reject jobs, fitters could renegotiate fees where additional work was required and fitters bore the commercial risk of non-payment by customers.

The Tribunal concluded that the contractual arrangements reflected the economic reality of the transactions and that the retailer's role was limited to arranging the fitting service.

The case highlights the importance of ensuring that contractual terms, payment flows and commercial arrangements are consistent where a business intends to act as an agent rather than a principal. The sums involved were substantial, with HMRC raising assessments for £13.5m VAT for this company alone and other retailers subject to similar assessments.

Tapi Carpets Ltd v HM Revenue & Customs [2026] UKFTT 1128 TC

www.bailii.org/uk/cases/UKFTT/TC/2026/1128.html

In a partial victory for the taxpayer, the FTT reduced a customs civil evasion penalty despite concluding that he had acted dishonestly by attempting to import a substantial quantity of tobacco. The Tribunal found that the taxpayer's personal circumstances were relevant when determining the level of mitigation that should be applied.

In April 2024 the taxpayer arrived in the UK from Gambia and was found to be carrying a quantity of tobacco far in excess of the travellers’ allowance and on which UK duty had not been paid. The goods were seized by Border Force, and as the seizure was not challenged became liable to forfeiture. In April 2025 HMRC issued an excise and customs civil evasion penalty, which the taxpayer appealed.

The Tribunal found that HMRC had established dishonesty on the balance of probabilities. It considered that the taxpayer must have been aware that restrictions applied to tobacco imports, given his travel experience, his reference during questioning by Border Force to the UK no longer being in the EU, and the fact that he had queried restrictions when purchasing the tobacco. The Tribunal also placed significant weight on the quantity involved (over 140 times the personal allowance) and his decision to enter the Green Channel without declaring the goods. Taken together, these factors led the Tribunal to conclude that he knew he was carrying tobacco in excess of the permitted allowance, intended not to declare it, and had acted dishonestly by the standards of ordinary decent people

The Tribunal accepted that the taxpayer’s literacy difficulties and dyslexia had affected his ability to engage with HMRC's correspondence and that this had not been taken into account when HMRC considered mitigation. It also noted that he had cooperated with Border Force at the time of the seizure and had made a response, albeit delayed, to HMRC's enquiries. Taking these factors into account, the Tribunal concluded that some mitigation was appropriate and reduced the penalty by 15% for co-operation and 15% for disclosure. The Tribunal also confirmed that it could not take into account a taxpayer’s inability to pay when considering whether to reduce a penalty.

Andrew Burridge v HM Revenue & Customs [2026] UKFTT 1127 (TC)

www.bailii.org/uk/cases/UKFTT/TC/2026/1127.html

The following Tax publications have been published.

• Latest Budget predictions and speculation

• Getting ready for the Carbon Border Adjustment Mechanism

• The Budget 2026: Where the Chancellor should look

• Explaining the budget process

• Death and taxes the autumn budget and reform of inheritance tax

• Correcting crypto mistakes and learning for the future

• The box stops here: Is this the end of box-shifting rates mitigation?

• Five tax issues slowing UK private equity exits

• Capital Goods Scheme changes: A welcome simplification

• Corporate tax residence: Avoiding the dual residence pitfall

• Landed Estates and rural businesses: The distinction between revenue and capital expenditure

• Powering down: What the VAT cut on domestic electricity means for households

• Beyond Pillar 2: The international tax issues that really count

• L-day 2026: Simplifying treaty relief for interest payments

The following client webinars are coming up soon.

• 3 September - International expansion – What every growing business needs to know

• 9 September - Helping you prepare for the mandatory payrolling of benefits

• 23 September - Navigating compliance: Accounting, tax and regulatory updates for finance leaders

• 24 September - Family businesses: What you need to know ahead of the Autumn Budget

• 29 September - Navigating cross border complexity: Estate planning for the internationally mobile

Diverting briefly into the realms of trust law, readers this month may care to glance at the case of Wensley Stock & Ors v Neal & Anor. A very civilised case where the trustees asked the HC for a determination. The fun fact being that this was about the royalties from the writings of the wonderful Reverend W Awdry. Luckily this fell the way one suspects the beneficiaries would prefer rather than going off the rails.

And the cherry (tree lane) on the cake? The judge found that the most useful case law on which to make his decision was the P L Travers case, on the treatment of royalties from Mary Poppins.

Wensley Stock & Ors v Neal & Anor (Rev1) [2026] EWHC 1823 (Ch) (17 July 2026)