Hello,
The world of tax never sleeps, and this week’s larger-than-normal SME tax news brings several very important updates for agents. These include HMRC’s proposals for enhanced reporting of transactions between close companies and their owners, the Royal Assent of Finance Act 2026, and a proposal to bring individuals, trusts and additional taxes within the scope of the Uncertain Tax Treatment (UTT) regime.
Tax agents and shareholders of close companies would be well advised to examine HMRC’s ‘Reporting company payments to participators’ consultation, which closes on 10 June 2026. In an effort to close the small business tax gap, HMRC are proposing rules which would require close companies to report details of individual transactions with participators.
Transactions caught will include cash withdrawals, loans, dividends and other distributions, with companies being obliged to report the amount and date of each transaction, as well as the recipient’s name, address and National Insurance number. While it has not been decided whether reporting will be in real time or part of an annual cycle, in either case, these proposals are likely to have a significant impact on close companies.
In other news, from 7 April, HMRC will begin to raise awareness of the forthcoming introduction of Multi-factor Authentication (MFA) for agent accounts. It is currently anticipated that the full rollout of MFA will be completed by the end of June. Now is the time for agents to consider the practical implications of MFA for their practice, particularly where codes need to be made available to multiple users.
We cover three cases this week. Advisers exposed to the Employment-Related Securities (ERS) regime may want to familiarise themselves with the CooperVision Lens Care Limited v HMRC decision, which considers several issues, including whether shares were ERS, valuation and reasonable care.
Do also note our new Sole trader v. limited company guide in Editor’s Choice, for 2026-27. With increasing rates of tax on dividend income from 6 April 2026, our tax-cost comparison table makes for interesting reading.
More news, cases and updates below.
The rossmartin.co.uk tax team
Online PRACTICAL tax resources for accountants and tax advisers BY accountants and tax advisers.
Quick News
Finance Act 2026 receives Royal Assent
Finance (No. 2) Bill 2025-26 received Royal Assent on 18 March 2026 to become Finance Act 2026. It contains a number of key measures, including the mandatory registration of tax advisers and the reform of Agricultural Property Relief and Business Property Relief.
Consultation on reporting company payments to participators
HMRC have launched a consultation, 'Reporting company payments to participators - modernising the reporting framework'. It proposes new rules that would make the reporting of transactions between close companies and their participators mandatory.
HMRC introducing Multi-factor Authentication for agents
HMRC have confirmed that they will introduce Multi-factor Authentication (MFA) for agent accounts as part of their efforts to combat the continued and evolving threat to online security.
Modernising and standardising company tax returns consultation
HMRC have launched a consultation, 'Modernising and standardising company tax returns'. It seeks feedback on the timeline for the new prescribed format for company tax returns and mechanisms ensuring compliance.
Opportunities to extend Uncertain Tax Treatment consultation
HMRC have launched a consultation 'Opportunities to Extend Uncertain Tax Treatment', which seeks opinions on bringing individuals and trusts within the Uncertain Tax Treatment (UTT) regime and extending its scope to include other taxes such as Inheritance Tax, Capital Gains Tax and Stamp Duty Land Tax.
One-to-many letters: Tracker
HMRC's latest one-to-many 'nudge' letter campaign targets individuals who included provisional figures or round sums in their 2024-25 tax return, which have not since been finalised.
R&C Brief 9 (2025): VAT liability of the supply of temporary medical staff
HMRC have published 'Revenue and Customs brief 9 (2025): VAT liability of the supply of temporary medical staff', which confirms that supplies of locum doctors qualify for the VAT exemption under Item 5, Group 7, Schedule 9, VAT Act 1994.
Tax Cases
Share sale subject to Income Tax and NICs, not CGT
In CooperVision Lens Care Limited v HMRC [2026] TC09808, the First Tier Tribunal (FTT) found that sums received on the sale of shares were taxable as employment income as the shares fell within the Employment-Related Securities regime.
'Bed & Breakfast' supply for cattle services, ruled one supply
In Alan and Diane McFarland (a partnership) v HMRC [2026] TC09799, the First Tier Tribunal (FTT) found that the supply of 'bed and breakfast' services provided for cattle was not two separate supplies for VAT purposes.
Upper Tribunal denies EIS relief as companies were not trading
In Putney Power Limited and Piston Heating Services Limited v HMRC [2026] UKUT 00105, the Upper Tribunal (UT) found that Enterprise Investment Scheme (EIS) relief was not available on shares issued by the companies, as neither was trading before the relevant deadline.
Editor's Choice
Sole trader v. limited company: Tax differences & savings (2026/27)
NEW: Is it better from both a tax and legal point of view to run a business as a sole trader or as a company? Are there tax advantages in running a business as a company? What legal protections apply?
MTD: Toolkit for accountants
UPDATE: The final regulations for MTD for Income Tax were laid before Parliament on 24 March 2026
Cryptoassets: How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
How do you tax Bitcoin? Are cryptocurrency or cryptoasset gains or profits, taxable? Can you obtain tax relief if you make losses on Bitcoin? Gains on transactions in cryptoassets are potentially taxable in the same way as other investments.
Guides & Updates
Self-employed
Influencers: Tax Overview
What expenses can online influencers claim for tax purposes? How is their income taxed? Are there special tax or accounting rules for influencers? What are the VAT rules for online influencers?
Flat (fixed) rate expenses or actual cost toolkit
What types of expenses can I use fixed-rate expense deductions for? Which is better, fixed-rate deductions or actual cost?
Partnerships
Partnerships: Capital Gains Tax
How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?
Partnerships: Unlimited or limited?
What types of partnership are there? What are the differences?
Directors & Companies
Do I pay a salary or dividend? 2026-27
This guide explores the tax-planning points and pitfalls of creating a tax-efficient pay package. Should 'excess profits' or one-off amounts of income be paid out of a company as a salary or dividend?
Loans to participators (Close Company Loans toolkit)
What is the Corporation Tax treatment when a close company makes a loan to a participator (director-shareholder)? How do the 'bed and breakfasting' rules work? What are the concerns with indirect loans, upstream loans and MBOs?
Employers
What is the 2026-27 PAYE tax code?
What is the 2026-27 PAYE tax code? What do the different types of tax code prefixes and suffixes mean?
Termination, redundancy and leaving payments
How are redundancy and termination payments taxed? What amounts can be paid tax-free? What amounts are taxable as earnings?
Private Client & Estate Planning
Tax Planning for the 2025/26 year-end: Private Clients
This is our 2025-26 year-end and new tax year checklist and toolkit for private clients.
CGT: Date of acquisition or disposal
When is the date of acquisition or disposal of an asset for Capital Gains Tax (CGT) purposes? When do special rules apply? Why does it matter?
Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of shares or securities in a company
When can you claim Business Asset Disposal Relief (BADR) on a share sale? What is the rate of Business Asset Disposal Relief (Entrepreneurs' Relief)? How do you claim BADR? What case law is there on BADR?
Limit (cap) on Income Tax reliefs
What are the limits and restrictions for Income Tax relief? When do they apply?
Penalties & Compliance
General Anti-Abuse Rule (GAAR) (subscriber version)
What is the General Anti-Abuse Rule (GAAR)? When does it apply?
More Tax Guides
Finance Act 2026: Contents
The Finance (No. 2) Bill 2025-26 was published on 4 December 2025 and received Royal Assent on 18 March 2026 to become Finance Act 2026. This is a summary of its contents, which includes legislation for the new 40% First Year Allowance, the registration of tax advisers, and the reform of Agricultural Property Relief and Business Property Relief.
VAT
Deregistration
When do I have to deregister for VAT? When can I voluntarily deregister? What penalties might HMRC issue if I am late notifying them of mandatory deregistration?
Energy-Saving Materials
The supply and fitting of energy-saving materials in residential accommodation attracts the zero rate of VAT. What does it apply to? What are the qualifying conditions? What case law is there on this topic?
Continuing Professional Development (CPD)
Recent and upcoming webinars include:
- Monthly Tax Update - April 2026
- Practice Insight - March 2026 (free)
- Mandatory HMRC Agent Registration Part 1 – Getting Started Before May 2026
- Monthly Tax Update - March 2026 (Spring Forecast)
- Inheritance Tax Planning for 2026/27 and Beyond
- Ethics and PCRT for Tax Advisors
- Making Tax Digital for Income Tax - Roadmap to April 2026
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, reorganisations and much more.
Missed the Last Tax Update?
Ross Martin Tax: SME Tax Update 12 March 2026
- Consultation on modernising the agency work regulatory framework
- Is a change coming to Income Tax devolution in Wales?
- HMRC's 'Get Tax Confident' campaign and Tax Awareness Week
- First company comes to PISCES
- Public electric vehicle charging qualified for VAT reduced rating
- Inaccurate loss claims were not deliberate
- Mixed-use SDLT rates applied to riverside property
- Recovery of pre-registration input VAT permitted
- Tax-efficient extraction of profits: toolkit (2026/27) NEW
- Mandatory tax adviser registration with HMRC NEW
- Globally mobile employees: National Insurance ...More
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