Hello,
This week’s big news includes the publication of guidance on the ethical use of Artificial Intelligence (AI) for tax work. We also have HMRC’s January Agent Update and a First Tier Tribunal decision exploring tax relief for amortisation under the Intangible Fixed Asset rules.
The use of AI tools in tax is increasing. This introduces wider ethical considerations and potential risks which require active management. In the past two years, several cases involving the use of AI have been heard by the tax tribunals. These have usually resulted in strong warnings from judges around the use of AI and unfavourable outcomes for the taxpayers involved, owing to a reliance on inaccurate information.
The seven bodies that produce the document 'Professional Conduct in Relation to Taxation' (PCRT) have now published guidance outlining how to apply the existing ethical principles laid down in the PCRT when using AI tools for tax. Several ethical risks have been identified, along with suggested safeguards. Some of the points made in the guidance include the necessity to understand the limitations of AI tools and the importance of approaching AI output with scepticism, thoroughly interrogating its response for technical correctness. This highlights the importance of having access to reliable tax technical resources, like rossmartin.co.uk, to verify AI-produced output.
Before using AI tools, it is important to consider whether such use needs to be disclosed to clients. It is also advisable to establish suitable AI usage policies and systems to record that due care has been taken when using AI. This is the case not only in terms of tax, but also in respect of wider compliance obligations, such as the handling of confidential data. Do read our news item below for further details on the new guidance.
In other news, HMRC’s January Agent Update is shorter than usual. It does, however, contain useful information, including practical points for making a valid Overpayment Relief claim in light of the most common reasons for claims being rejected.
On that theme, it is all too easy at this time of year to focus on filing 2024-25 tax returns. Do remember that 31 January will also be the deadline to claim various reliefs, and make elections, in respect of earlier tax years; now is a good time for a final check to ensure wider tax compliance is in order.
More news, cases and updates below.
The rossmartin.co.uk tax team
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Quick News
New guidance published on use of AI in tax
Topical guidance on using Artificial Intelligence (AI) in tax work has been issued by the seven professional bodies responsible for producing the document 'Professional Conduct in Relation to Taxation' (PCRT). The new guidance is designed to be read in conjunction with existing PCRT guidance and discusses scenarios and possible safeguards allowing AI tools to be used ethically.
Agent Update 139: January 2026
HMRC have published their Agent Update for January 2026. We have summarised the key content, including a reminder of the changes to voluntary National Insurance Contributions (NICs) for periods abroad, guidance on how to prepare your clients for Making Tax Digital (MTD) for Income Tax and tips for making a valid Overpayment Relief claim.
Revenue and Customs Brief 1 (2026): Removal of linked goods concession
HMRC have published Revenue and Customs Brief 1 (2026): 'Removal of linked goods concession', which confirms that the Extra Statutory Concession (ESC) for VAT on minor promotional items supplied in linked supplies schemes has been withdrawn.
Tax code errors generate £3.5bn
UK taxpayers overpaid £3.5bn in Income Tax last year due to errors in PAYE codes and tax complexity. Research from a Freedom of Information (FOI) request revealed that 5.6 million people overpaid HMRC, despite paying Income Tax through the PAYE system.
Tax Cases
UT agrees with HMRC not to grant suspension of penalties
In Philip Cox and Debra Cox v HMRC [2026] UT000114, the Upper Tribunal (UT) found that HMRC's decision-making in refusing to suspend penalties applied for an inaccurate Business Asset Disposal Relief claim was not flawed.
Client list qualified as intangible fixed asset
In Ripe Limited v HMRC [2025] TC09735, the First Tier Tribunal (FTT) found that acquiring a client list and related data was correctly treated as an Intangible Fixed Asset (IFA) eligible for amortisation deductions. This was despite the absence of written documentation and the fact that the asset was held in a different entity from the one utilising it.
Editor's Choice
Last minute: Late tax return notification
What should you do if you are a taxpayer (or agent for a taxpayer) who has never been in Self Assessment before, and it is discovered in late January that a tax return needs to be filed?
Top tips for last-minute tax returns
This guide is a summary of top tips for dealing with last-minute tax returns, what not to forget and how to protect against enquiries.
Tax Return questionnaire
What information is needed to complete a Self Assessment Tax Return? This questionnaire will help you gather the documents and information required.
Guides & Updates
Self-employed
Wholly and exclusively…toolkit
When is an expense allowed for tax purposes? What does 'wholly and exclusively' mean? How do you determine if a cost is wholly and exclusively incurred for the purpose of a trade? What cases are there?
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
Companies: Autumn Budget 2025
UPDATE: Changes for companies announced at the 2025 Autumn Budget on 26 November 2025 include an increase in the rate of tax charged on loans to participators in close companies, increases to the investment limits for the Enterprise Investment Scheme and Venture Capital Trusts and a new pilot targeted advance assurance service for Research & Development relief.
Employers
Employment Taxes: Autumn Budget 2025
UPDATE: The 2025 Autumn Budget saw changes to employment taxes, including a cap on relief from National Insurance for salary sacrifice pension contributions, the removal of tax relief on non-reimbursed homeworking expenses, an increase in National Minimum Wage (NMW)/National Living Wage (NLW) rates and changes to the eligibility criteria for various share schemes.
Private Client & Estate Planning
Online filing exclusions for 2024-25 tax returns
Some taxpayers will be unable to file their Self Assessment returns online for the year ended 5 April 2025, due to software specification issues from HMRC. Lists of filing exclusions for individuals, partnerships, trusts and estates have recently been published by HMRC.
Payments On Account (POAs): Self Assessment
When are Payments On Account (POAs) made under Self Assessment? How are POAs calculated? What are the consequences of not making a payment on time? Can POAs be reduced?
Inheritance Tax: Autumn Budget 2025
UPDATE: Changes to Inheritance Tax (IHT) announced at the 2025 Autumn Budget on 26 November 2025 include IHT thresholds being frozen at their current levels for an additional year until 2031, and the introduction of a spousal transfer on any unused APR/BPR £2.5m allowance.
Land & Property
Replacement of Domestic Items Relief
What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met?
Rent-a-room Relief
What is rent-a-room relief? When does it apply? What are the limits and restrictions?
Overseas & Residence
Foreign income and residency pages: FAQs
How do you complete the foreign and residency pages of the Self Assessment return?
Offshore Income Tax Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.
Penalties & Compliance
Special Relief
What is Special Relief? When does it apply? Does Special Relief have a time limit to claim?
Materiality and tax
What is materiality and how does it apply to tax?
Penalties: Offshore Income, CGT & IHT
What penalties apply for errors and failures relating to offshore Income and Capital Gains Tax (CGT)?
VAT
VAT: Autumn Budget 2025
UPDATE: VAT changes announced at the 2025 Autumn Budget include the exclusion of ride-hailing services from the Tour Operators Margin Scheme (TOMS) and a new relief for businesses donating goods to charities.
Spring Forecast Analysis, Client Newsletter & Webinar
The Spring Forecast will be presented by the Chancellor of the Exchequer on 3 March 2026.
Our team of qualified accountants and tax advisers will work through the night to provide you with the tools you need to communicate with your clients and advise them immediately.
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- Spring Forecast Tax Update webinar: update on recent and proposed changes in taxation, including any relevant announcements from the Spring Forecast. Live at 10am on 6 March and on demand thereafter.
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Continuing Professional Development (CPD)
Recent and upcoming webinars include:
- Inheritance Tax Planning for 2026/27 and Beyond
- Monthly Tax Update - December 2025
- Budget Update
- Practice Insight - December 2025 (free)
- Ethics and PCRT for Tax Advisors
- Making Tax Digital for Income Tax - Roadmap to April 2026
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Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 15 January 2025
- Scottish Budget 2026-27
- List 3 updates: approved organisations and societies
- R&D relief claim for specialised educational platform rejected
- UT splits FTT decision on bank transfers and credit card remittances
- Failure to notify chargeability to tax
- Income Tax and National Insurance (for individuals): Autumn Budget 2025 UPDATE
- Capital Allowances: Autumn Budget 2025 UPDATE
- Overseas & Residence: Autumn Budget 2025 UPDATE ...More
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