Hello,
We have updates this week on the deductibility of pension contributions, tax fraud in the temporary employment agency and recruitment sector, import VAT recovery, and the application of the welfare VAT exemption for supplies made in Wales.
SME Tax News
In A D Bly Groundworks and Civil Engineering Limited and CHR Travel Limited v HMRC [2025] EWCA Civ 1443, the Court of Appeal (CoA) found that deductions for unfunded pension provisions were disallowable because the arrangements were primarily tax-driven rather than a genuine pension scheme.
HMRC have published an issue briefing to raise awareness of tax fraud for employment agencies and employers. HMRC warn that new fraudulent models, offering cheaper payroll services, are currently being marketed to employers and recruitment agencies.
HMRC are urging 'Christmas crafters' who earn income from selling festive items to check if they need to declare their earnings. Side hustlers who earn seasonal income during the festive period may need to declare earnings if they exceed £1,000.
Hello,
This week, we bring news of HMRC examining loans to participators where tax may not have been properly accounted for, the November 2025 Employment-Related Securities (ERS) Bulletin, and an important Upper Tribunal (UT) decision in the context of employee incentivisation arrangements.
The National Audit Office (NAO) has published its departmental overview, 'HM Revenue & Customs 2024-25'. While there are signs of performance improvement, the Comptroller and Auditor General (C&AG) once again issued a qualified audit opinion on HMRC’s accounts due to material levels of error and fraud in Child Benefit, Corporation Tax research and development reliefs, and personal tax credits expenditure.
HMRC have identified companies that may have underpaid s.455 tax in respect of loans made to participators. The agents of affected companies are being contacted by email, asking them to check whether relief has been correctly claimed in Corporation Tax returns that were filed before April 2025.
In Michael Saunders v HMRC [2025] UKUT 00374, the Upper Tribunal (UT) found that a payment made to an individual under their employer's Long-Term Incentive Plan after becoming non-UK resident was taxable as employment income. The payment was earned during his UK-based employment and was not attributable to the overseas part of the split tax year.
HMRC have released the November 2025 edition of the Employment-Related Securities (ERS) Bulletin. It contains some useful information and important reminders around the ERS reporting process. Here is our enhanced version.
Hello,
On 4 November, the Chancellor gave an unprecedented pre-Budget ‘Scene Setter’ speech. This felt somewhat like the typical preamble we are accustomed to on Budget Day itself, immediately before announcements are made.
