Hello,
This week’s highlights include the May 2025 Agent Update, HMRC issuing Stop Notices to an individual for the first time, and a report from the National Audit Office (NAO) on collecting the right tax from wealthy individuals.
This month’s Agent Update makes several important points, including confirmation that HMRC will stop sending paper copies of some Corporation Tax letters from June.
In addition, the Personal Tax Query Resolution Service for Agents, an escalation route for Self Assessment and PAYE queries which launched on 31 March 2025, can now be accessed via a new form, which will hopefully make the service more accessible.
In other news, HMRC have, for the first time, issued Stop Notices to an individual promoting tax avoidance schemes, rather than to a company. HMRC say this action supports the Government’s plan to close the tax gap.
This comes in the same week as the NAO’s publication of a report on collecting the right tax from wealthy individuals. The NAO notes that while the amount of compliance yield has increased, there is too much uncertainty around the tax gap estimate for wealthy individuals, notably surrounding offshore wealth, to be confident that non-compliance is not far higher than HMRC has detected.
More news, cases, and updates below.
The Ross Martin Tax Team
Online PRACTICAL tax resources for accountants and tax advisers BY accountants and tax advisers.
Quick News
Agent Update: May 2025
HMRC have published their Agent Update for May 2025. We have summarised the key content with links to our detailed guidance on the topics covered. This month's update includes changes to Corporation Tax reminders, HMRC beginning to issue 2024-25 Simple Assessment letters, and a new compliance check guidance tool.
One-to-many letters: Tracker
HMRC's latest one-to-many letter targets individuals who claimed Investors' Relief in 2023-24, but may not have met the qualifying conditions.
Struck-off solicitor Baxendale-Walker issued with Stop Notice
In a bid to support the government's plan to close the tax gap, HMRC have issued their first Stop Notice to an individual. Paul Baxendale-Walker, a struck-off solicitor best known for his involvement in the Rangers Football Club tax avoidance case, is the first individual to be issued with a Stop Notice.
Wealthy tax dodging a bigger problem, says NAO
The National Audit Office's report, 'Collecting the right tax from wealthy individuals', warns that the levels of tax evasion and avoidance by Britain's rich may be much higher than HMRC previously thought. The complexity of their affairs allows for greater opportunities for dishonesty, the report concluded.
Tax Cases
Late tax return filing penalties quashed
In Denise Howarth v HMRC [2025] TC09508, the First Tier Tribunal (FTT) found that a taxpayer who had failed to complete the final step to submit her tax return had a reasonable excuse for not submitting on time.
Mental health unit ‘bedroom wing’ construction was not zero-rated
In NHS Ayrshire & Arran Health Board v HMRC [2025] TC09511, the First Tier Tribunal (FTT) found that part of a National Secure Adolescent Inpatient Service building was not intended to be used solely for a ‘relevant residential purpose’. It was a ‘hospital or similar institution’, meaning that construction services and materials used in its build could not be zero-rated for VAT.
Vitamin drips were medical care for VAT
In Get a Drip Ltd v HMRC [2025] TC09509, the First Tier Tribunal (FTT) found that supplies of intravenous vitamin drips and vitamin injections fell within the VAT exemption for ‘medical care’.
Editor's Choice
IHT: Residence Nil-Rate Band (RNRB)
What is the Residence Nil-Rate Band? When was it introduced? How does it work? Who can claim it?
Land Remediation Relief (LRR)
What is Land Remediation Relief (LRR)? Who can claim LRR and what are the conditions? What happens if LRR creates or enhances a loss?
Guides & Updates
Self-employed
Is it a trade, a business, or an investment activity?
Starting in business or running one? Is your new or existing business a trade, a business or an investment activity? The distinction is very important for tax purposes. This guide runs through key issues for tax purposes.
Partnerships
Partnerships: How to prepare partnership and partners tax returns
How to prepare partnership returns. How are partnership profits calculated? How are corporate members of partnerships taxed? What are the differences between the tax treatment of individual and corporate partners?
Directors & Companies
Loan relationships: Start here
What is a loan relationship? How are profits and losses made from loan relationships taxed? What is the difference between a trading and non-trading loan relationship? What could restrict relief under the loan relationship rules?
Controlled Foreign Companies (CFC)
Controlled Foreign Companies (CFC): an introductory summary for SME owners and advisers.
Employers
PAYE: Starter checklist new employee 2025-26
NEW: Freeview PAYE starter checklist. Use this form if you are taking on a new employee.
Private Client & Estate Planning
IHT: Long-term non-resident spouses (previously non-domiciled spouses)
What are the Inheritance Tax (IHT) rules for transfers to spouses who are long-term non-UK resident (previously non-UK domiciled)?
IHT Agricultural Property Relief
What is Agricultural Property Relief (APR)? When does it apply? What are the conditions and restrictions of the relief?
Capital Allowances
Short-life assets
What is a short-life asset? How to plan for short-life assets, what can be included and what are the exceptions?
Overseas & Residence
Business Investment Relief (BIR)
Business Investment Relief (BIR) is a relief for formerly non-UK domiciled individuals, designed to encourage them to remit funds to invest in UK businesses. The abolition of the non-domicile regime has brought changes to BIR for both existing and future investments. Ultimately, the relief will cease from 5 April 2028.
Investigations & Enquiries
Spotlight 63: Property business arrangements involving hybrid partnerships
UPDATE: HMRC have published, and in May 2025 updated, Tax Avoidance Spotlight 63: ‘Property business arrangements involving hybrid partnerships.’
VAT
Registering for VAT
UPDATE: HMRC have issued guidance on a modified process for applying for a VAT registration exception.
Health and welfare: VAT
When do reduced rating, zero-rating and VAT exemption apply to services relating to medical care, health and welfare? What are the rules?
Tax Tools & Calculators
Tax tools & calculators
We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.
Calendar of tax deadlines and new tax measures
This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax-significant events.
CPD
Recent webinars include:
- Practice Insight - May 2025 (free)
- Monthly Tax Update - April 2025
- Disincorporation - I'm an OMB Company, Get Me Out of Here!
- Practice Insight - April 2025 (free)
- Making Tax Digital for Income Tax - Roadmap to April 2026
- Monthly Tax Update - Spring Statement Special
Need Tax Support?
Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.
Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 15 May 2025
- Another decrease in HMRC's interest rate
- One-to-many letters: Tracker
- Spotlight 70: VAT grouping structure arrangements used by care providers
- Loan novation resulted in Income Tax charge
- FTT denies sideways loss relief
- Online maths tests not VAT exempt
- Private Residence Relief granted on £27 million disposal
- Land Remediation Relief (LRR) NEW
- Sole trader v. limited company: Tax differences & savings (2025/26)
- Staff Suggestion Schemes ...More
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