Money Covered: The Week That Was – 16 May 2025

Welcome to The Week That Was, a round-up of key events in the financial services sector over the last seven days.

The third episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team discusses developments that we expect to see in 2025 in relation to Financial Services and Accountants is now available.

To listen to this and all previous episodes, please click here.

Headline Developments

ICAEW consults on revised disciplinary sanctions guidance

The ICAEW has opened a consultation on revisions to its Disciplinary Sanctions Guidance (which is used by its Disciplinary Committees in reaching decisions in respect of sanctions to be imposed following investigations). In doing this, it hopes to promote consistency, transparency and fairness of outcomes to ensure the public interest is served, by improving the clarity and usability of the guidance itself.

Key proposals include the introduction of a section to deal with dishonesty; updates to a number of specific sections including audit- and tax-related breaches; increased penalties for ethical breaches and for failing to cooperate with ICAEW investigations; and the division of guidance for firms and individuals where appropriate. The consultation runs until 9 June.

To read the proposed revised guidance, please click here.

Auditors

ACCA calls for proportionate SME audit requirements

The Association of Chartered Certified Accountants (ACCA) has urged the Financial Reporting Council (FRC) to implement more proportionate audit requirements for small and medium sized enterprises (SMEs). 

ACCA's position emphasised the need for audit standards to be applied in a way that reflects the complexity and risk profile of SMEs rather than focusing on size, ensuring that audit requirements are not unduly burdensome.

To read the full ACCA statement, please click here.

Tax Practitioners

HMRC Landfill Tax Crackdown

HMRC has increased its compliance activity in relation to Landfill Tax.  Landfill Tax was introduced to encourage businesses to adopt a more environmentally sustainable approach to waste disposal. Landfill Tax is charged on waste disposed of on a landfill site (either authorised or unauthorised). There are two rates of Landfill Tax (effective from 1 April 2025):

• the Lower Rate of £4.05 per tonne on certain “qualifying materials”; and

• the Standard Rate of £126.15 per tonne on everything else.

Common examples of disputes relating to Landfill Tax include:

• Does the material disposed of qualify for the Lower Rate? HMRC frequently challenges whether materials fall within this definition.

• Does the disposal properly qualify for a water discount? In certain circumstances, you can apply to HMRC to discount the water content of material when calculating the taxable weight of the material (when water accounts for 25% or more of the weight).

• Is the disposal illegal or unauthorised? HMRC will consider the nature of the material, the location of the deposit, and the way it was deposited. HMRC can investigate anyone who is involved in the disposal chain, including waste brokers and individual company officers.

To read our blog relating to Landfill Tax, please click here. 

Tax Tribunal issue revised statement on ADR

On 9 May 2025, the First-tier Tribunal (the Tribunal) issued a revised Practice Statement in relation to ADR. The statement sets out guidance for appeals against HMRC decisions where ADR is proposed after an appeal has been made to the Tribunal.

The revised Practice Statement gives the Tribunal further obligations "to bring to the attention of the parties the availability of any appropriate alternative procedure for the resolution of the dispute." This will allow the Tribunal to direct parties to engage in ADR where appropriate.  The Practice Statement also comments on costs and states that any party unreasonably not considering or entering into ADR may face cost consequences.

Whilst the revised guidance is in relation to appeals, the Tribunal has stated that ADR can be utilised before an appeal has been made to the Tribunal.

To read the statement, click here.

ICAEW says government proposals risk damaging tax compliance and trust in the tax system

ICAEW, in response to the government's consultation on enhancing HMRC's ability to tackle tax advisers facilitating non-compliance, warns that the government's proposed measures could have a much wider reach, with the potential to catch all reputable tax advisers.

Iain Wright, ICAEW Chief Policy and Communications Officer, explains that unless the proposals are properly targeted, they could lead to increased costs for taxpayers, which may result in taxpayer non-compliance and become a barrier to growth.  Wright adds that the measures proposed are disproportionate to the government's objective to tackle the behaviours "of a small minority of agents who actively facilitate non-compliance and would be contrary to the public interest".

To read more, please click here. 

First-Tier Tribunal allows claim for capital allowance

On 23 December 2024, the First Tier Tribunal handed down judgment in The Mersey Docks and Harbour Company Ltd v HMRC [2024] UKFTT 1163 (TC) and allowed a company's claim for capital allowances for expenditure.  

The company who appealed to the First Tier Tribunal - established a water container terminal for the Port of Liverpool from 2013-2017. HMRC did not agree with the treatment of tax (specifically, a capital allowance relief) in respect of a quay wall. The company argued that the quay wall should be qualified as a 'plant' under the Capital Allowances Act 2001 (CAA). However, HMRC disagreed, with their position being that the quay wall was excluded from capital allowance relief as it would be deemed a 'building or structure' (and is therefore excluded under sections 21 and 22 of the CAA)

The First Tier Tribunal agreed with the company and allowed the company's claim for capital allowance in respect of expenditure incurred on the quay wall. We await to see whether HMRC will seek permission to appeal the decision in the Upper Tier Tribunal. 

To read RPC's commentary and analysis on the decision, please click here.

Insurance Brokers

The role of brokers in emerging charity risks

UK charities are facing growing challenges, such as increased cyber-attacks and thefts, which jeopardise their ability to deliver essential services. With limited resources, it’s vital they have the right insurance cover to continue operating during disruptions.

Brokers play a key role by understanding each charity’s structure, operations, and evolving risks. In collaboration with specialist insurers, brokers can tailor insurance solutions to reflect the specific risks, activities and structures of each charity. They can also recommend essential coverage like professional liability, cyber, trustees' liability, and business interruption. At a minimum, charities should have property, public liability, and employers' liability insurance. However, in today’s environment, additional cover such as professional liability, cyber, trustees' liability, and business interruption is also highly important.

Additionally, brokers can support charities in developing effective risk management practices and accessing specialist training, helping them comply with regulations, manage risk as they grow, and potentially lower future insurance costs.

To read more, please click here.

Pensions 

Pensions Policy Institute highlights Defined Contribution savers withdrawing funds without advice

A report by the Pensions Policy Institute (PPI) has set out the key trends in consumers accessing their pension pots which includes a statistic that 51% of the 450,851 pension pots accessed between October 2023 – March 2024 were fully withdrawn as cash and 70% did so without formal advice.

The PPI states that this indicates a growing preference for flexibility and a desire for greater control over retirement savings but highlighted the risk of individuals withdrawing income without the appropriate strategy and without formal advice which could impact their financial security in later life.

The report comes amid rumours of the introduction of the new guided retirement duty in the upcoming Pensions Scheme Bill and the increased need for greater access to pensions advice for savers.  

To read the report, please click here.

Mr T (CAS-45233-Y4G1): Pension Ombudsman awards £3,000 for exceptional distress and inconvenience 

Mr T was a member of the Fee Paid Judicial Pension Scheme (the Scheme) which was a defined benefit arrangement. Mr T complained that his Scheme records were inaccurate and there had been significant delays in correcting them. The Pensions Ombudsman upheld Mr T's complaint against the Ministry of Justice (MoJ) and notwithstanding the non-financial injustice suffered, required the MoJ to increase the redress payable to Mr T from £1,500 to £3,000 to reflect the exceptional distress and inconvenience caused by its maladministration. 

The POS commented that the length of time it had taken the MoJ to resolve the issue complained of was unacceptable and exceptionally long and warranted, unusually, an award in excess of £2,000. 

To read the decision, please click here.

Regulatory developments for FCA regulated entities

FCA proposes streamlined insurance rules

The Financial Conduct Authority (FCA) has this week published a consultation paper proposing revisions to its rules, in particular the Insurance Conduct of Business Sourcebook (ICOBS), which would remove rules which were felt to be outdated or duplicative.

In particular, the FCA proposes to redefine which commercial insurance customers fall within the scope of the rules, looking to diminish the regulatory obligations on insurers dealing with larger policyholders while retaining an appropriate degree of protection for smaller companies (aligning definitions to those used by FOS for the purposes of the eligible complainant definition). Further proposals include loosening of product value review requirements, such that firms can assess the necessary frequency per-product rather than there being a rigid annual requirement; and removing mandatory minimum employee training requirements.

To view the consultation document, please click here.

FCA publishes feedback from smaller asset managers and alternative business model review

The review follows the FCA's Alternatives Supervisory Strategy from August 2022 whereby plans were outlined, focussing on smaller firms to identify business models posing greater consumer harm risks. The FCA's findings were that some firms: (a) had insufficient processes for the types of investor assessments they need to undertake; (b) had ineffective conflict management arrangements that increase the risk of consumer harm; and (c) had not yet recognised how it applied to their business model.

The FCA continues to monitor compliance and will be in contact with firms where it has identified issues so that improvements can be made.

The findings can be found here.

FCA closes almost 500 whistleblowing cases with most requiring no action

The FCA has published data to show that in Q1 of 2025 (January to March 2025) it received 281 new whistleblowing reports. It received 298 new reports for the same period in 2024.  Most of the reports relate to compliance, followed by fitness propriety and consumer detriment.

The FCA closed 468 whistleblowing reports in Q1 2025. This includes:

• There were 213 reports where no direct action was taken.

• The FCA took significant action to manage harm in relation to 12 reports.

• The FCA took steps to reduce harm in 192 reports.

To read more, please click here.

Relevant case law updates 

Supreme Court rules on scope of potential contributors to assets under s213 Insolvency Act

In Bilta (UK) Ltd and others v Tradition Financial Services Ltd [2025] UKSC 18, the Supreme Court had cause to rule on precisely what was meant by the provision under s213(2) of the Insolvency Act 1986 permitting the court to require 'any persons who were knowingly parties' to fraud of an insolvent company to contribute to its assets.

Tradition Financial Services (Tradition) was a brokerage firm that had knowingly assisted the insolvent claimants in finding buyers for carbon credits, with the knowledge that VAT was being charged but ultimately then placed beyond the reach of HMRC. The liquidators of the Claimants alleged that this was sufficient to bring them within the scope of the s213 provision. In contrast, Tradition argued that 'any persons' ought to be interpreted as being limited to those who capable of directing or managing the company.

The Supreme Court took the former view. The language used in s213 didn't bear out the more restrictive interpretation, and there was no reason to restrict potential liability to insiders.

To read the judgment, which also considers the impact on the suspension of limitation for fraud of restoring a company to the register, please click here.

Challenging HMRC's Debt Management Actions

In the recent case of Local Fuel Ltd v HMRC [2025] EWHC 390 (Ch), the High Court addressed whether a company's challenge to HMRC's enforcement of a tax debt should be pursued through judicial review or as a civil claim. HMRC contended that the company's action was an abuse of process, arguing that such decisions could only be contested via judicial review, which has stricter time limits and requires the court's permission to proceed. However, the Court disagreed, ruling that the company's claim could proceed under Part 8 of the Civil Procedural Rules, as a decision taken by a public body is only amenable to judicial review if it creates a liability, or alters a pre-existing liability. Here, there was no decision the company could have challenged through judicial review, and so it was entitled to bring a claim under Part 8 for a declaration that the debt claimed by HMRC was unenforceable.

To read our full blog on this case, please click here.

With thanks to this week's contributors: Rebekah Bayliss, Shauna Giddens, Haiying Li, Nitin Mathias, Damien O'Malley, Daniel Parkin, Faheem Pervez, and Joe Towse.