Hello,
VAT on biscuits, reasonable excuses for late filing and the agency rules are among this week’s hot topics. We have also published another new guide, for subscribers, this time examining the Capital Gains Tax (CGT) and Income Tax consequences of land leases.
Several First Tier Tribunal decisions have caught our eye this week. The first, Five Star (Development) Homes Limited v HMRC, concerns an appeal against VAT late filing penalties that were charged under the relatively new points-based penalty regime. As the taxpayer had been due to submit monthly VAT returns, points, and penalties accumulated rapidly.
One lesson to take away from this case is the importance of internal controls, from a tax perspective. The taxpayer’s issues began with a change in VAT accounting software, which resulted in returns not being properly submitted to HMRC. This issue was seemingly compounded by insufficient oversight of a less experienced member of staff, who failed to alert the managing director to the issue. Ultimately, the company’s penalty appeal failed.
The Tyler Security Limited v HMRC decision is also well worth reading. Here, the question was whether the agency rules applied to a company providing specialist dog-handlers to end clients. This case runs through the key conditions which result in the agency rules applying, which ultimately, they did, costing Tyler Security £88,500.
Finally, do check out our new guide on leases in relation to land, which can be found in Editor’s Choice. The CGT and Income Tax aspects of land leases can be a complicated subject, meaning this guide will be helpful when analysing how transactions are taxed.
More news, cases, and updates below.
The rossmartin.co.uk tax team
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Quick News
Councils step on snail tax scammers
Westminster City Council has publicly criticised "unscrupulous traders" for trying to claim business rates tax exemption for running snail farms in commercial premises. This is a year after we reported that Liverpool Council had rejected a claim for agricultural business rates relief for an empty office building that was being used as a 'snail farm'.
One-to-many letters: Tracker
HMRC's latest one-to-many 'nudge' letter targets taxpayers with an income of over £200,000 who have not submitted a 2022-23 tax return.
Tax Cases
Trainee’s failings did not result in reasonable excuse
In Five Star (Development) Homes Limited v HMRC [2025] TC09668, the First Tier Tribunal (FTT) found that a trainee’s failure to submit VAT returns on time before neglecting to alert the managing director did not give rise to a reasonable excuse. HMRC’s late filing penalties were valid.
HMRC's denial of input VAT recovery partially invalid
In Eurocent (Buckingham) Ltd v HMRC [2025] TC09666, the First Tier Tribunal (FTT) partially granted an appeal against HMRC's denial of input VAT recovery on fees associated with buying retail units.
Dog handler provider bitten by the agency rules
In Tyler Security Limited v HMRC [2025] TC09663, the First Tier Tribunal (FTT) found that the agency rules applied to dog handlers being supplied through a third-party.
Were HMRC taking the biscuit?
In Ferrero UK Ltd v HMRC [2025] TC09654, the First Tier Tribunal (FTT) found that Nutella Biscuits were not chocolate-covered and were therefore zero-rated for VAT.
Editor's Choice
Leases in relation to land
NEW: What are the Capital Gains Tax (CGT) and Income Tax consequences of leases? What is the difference between a grant and an assignment? What is a premium and a reverse premium? What are the tax consequences of a lease extension and surrender?
Guides & Updates
Self-employed
Herd basis: Farming
The 'herd basis' recognises, for tax purposes, the economic nature of animals held for production as capital assets, rather than as trading stock. This can be of benefit to some farmers and result in tax savings.
Partnerships
Partnership agreements: What should be considered?
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? Why are they important?
Directors & Companies
Calculating Corporation Tax & Checklist
How do you calculate Corporation Tax? What is the small profits rate? How do you calculate Marginal Tax relief? How do you adjust for Associated Companies? What is meant by Control? What are Augmented profits?
Substantial Shareholding Exemption (SSE)
What is the Substantial Shareholding Exemption? When does it apply? How does it interact with de-grouping charges?
Leases: Plant and machinery
A summary of the accounting and tax treatment of leased Plant and Machinery (P&M).
Employers
Loans: Employment-related (beneficial loans)
What is a beneficial loan? What are the tax and Benefit In Kind implications? Which loans are exempt? How is the value of the benefit calculated? How is the beneficial loan reported? What happens if the loan is written off?
Mandatory payrolling of benefits from 2027: Briefing
The Government has announced that the mandatory payrolling of Benefits In Kind and taxable employment expenses will not come into force until 6 April 2027. This replaces the earlier date of 6 April 2026, allowing employers more time to prepare for the changes.
Private Client & Estate Planning
UK Trusts
What is a trust? What types of trust are there? How are UK trusts taxed?
Personal allowance: Who is entitled to claim?
Am I entitled to the UK personal allowance? Are there circumstances when the Personal allowance is not available?
Capital Allowances
Disposal values & rules
What is a disposal for capital allowance purposes? What is the tax consequence of a disposal? What value needs to be accounted for on a disposal?
Farming: Capital allowances
What types of expenditure may qualify for capital allowances in farming businesses? What farming-specific points need to be considered?
Penalties & Compliance
Discovery Assessments
UPDATE: When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? Can HMRC issue two alternative assessments for the same period? What are your rights of appeal and defences?
Client guide: Reasonable care and tax penalites
UPDATE: What triggers a tax penalty? What standard of care is expected from a taxpayer? What is reasonable care? When is an error careless?
VAT
Fuel scale charges (VAT)
What is the VAT fuel scale charge? What alternatives are there to the VAT fuel scale charge? Does the VAT fuel scale charge apply to vans?
Land & Property: Dwellings
What is a dwelling for VAT purposes? What is the VAT treatment for construction, conversion, sale, and letting of a dwelling?
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.
Continuing Professional Development (CPD)
Recent and upcoming webinars include:
- Practice Insight - November 2025 (free)
- Monthly Tax Update - October 2025
- Practice Insight - October 2025 (free)
- Monthly Tax Update - September 2025
- Making Tax Digital for Income Tax - Roadmap to April 2026
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Virtual Tax Partner© Support
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Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 23 October 2025
- Agent Update 136: October 2025
- Professional bodies make Budget representations
- UK's property tax system second-worst in OECD
- One-to-many letters: Tracker
- What might be announced in Autumn Budget 2025?
- National Insurance contributions for directors NEW
- Deferred consideration and earn-outs
- IHT: Agricultural and Business Property Reliefs, April 2026 changes
- Transfer Of a Going Concern (TOGC) ...More
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