Corporate Tax Update (July - September 2026)
Welcome to the latest edition of our Corporate Tax Update covering key developments from July, August and September 2026, written by members of RPC's tax team.
In this update, we look at key UK tax developments including changes to VAT rules for non-UK members of VAT groups and in the application of the capital goods scheme. We also look at case law developments involving SDLT, the 'salaried members' rules and what amounts to a "reasonable excuse" when it comes to tax non-compliance.
1. HMRC Revises UK VAT Refund Rules for Non-UK VAT Group Members
On 8 September 2026, and with effect from 1 July 2026 onwards, HMRC introduced a revised policy allowing eligible non-UK businesses that belong to a VAT group to claim UK VAT refunds in their own name. Since 1 January 2021, all non-UK VAT group members had been required to submit claims through their group’s representative member, which prevented some businesses from recovering VAT they had incurred. Under the revised policy, each member must submit its own claim for UK VAT incurred, and the representative member can only claim VAT that it incurred itself. As a transitional measure, claims for the 2025–26 prescribed year (1 July 2025 to 30 June 2026) may be submitted by either the individual member or the representative member until 31 December 2026. HMRC will also review claims for VAT incurred from 1 January 2021 that were rejected because they were not submitted by the representative member, provided the VAT was not included in a subsequent claim. Requests for review must be submitted to HMRC by 31 August 2027, with the required supporting information.
Source: UK VAT refunds for non-UK businesses in a VAT group
2. Reliance on Professional Advice Not a Reasonable Excuse for Non-Compliance with HMRC Information Notices (Upper Tribunal)
On 7 August 2026, the decision in Hill and McCracken v HMRC[1] was released. In this case the administrators of two pension schemes received HMRC information notices. After the schemes were wound up, their professional advisers told them that they no longer needed to comply with the notices. Despite HMRC confirming that the notices remained enforceable against the individuals, they relied on the advice and failed to provide the requested information, resulting in escalating penalties. The Upper Tribunal upheld the First-tier Tribunal’s decision that they had no reasonable excuse for non-compliance, finding that they had failed to exercise reasonable care by relying on unclear advice without asking questions, checking correspondence or investigating inconsistencies and HMRC’s warnings. The Tribunal confirmed that taxpayers relying on advisers must exercise independent judgement and take reasonable care, although they are not required to second-guess professional advice or obtain multiple opinions.
Source: Hill and McCracken v HMRC Final pdf.
3. Overpayment Relief for SDLT (Upper Tribunal)
On 27 July 2026, in HMRC v Candy[2], the Upper Tribunal decided whether a taxpayer who had missed the time limit for amending an SDLT return could claim a repayment through the overpayment relief provisions in Finance Act 2003. The taxpayer had paid SDLT following the substantial performance of a contract for the assignment of a lease, but the contract was subsequently not carried into effect following its novation. The taxpayer sought repayment under section 44(9) of the Finance Act 2003 or, alternatively, under paragraph 34. The claim under section 44(9) failed because the statutory time limit for amending the SDLT return had expired. HMRC also rejected the alternative claim, arguing that the mandatory wording of section 44(9), which requires repayment to be claimed by amending the return, prevented the taxpayer from using paragraph 34 to recover the tax. The Upper Tribunal held that section 44(9) does not preclude a separate claim for overpayment relief under paragraph 34. The Tribunal confirmed that overpayment relief operates as a statutory remedy of last resort, independently of other reliefs under the SDLT legislation. It has its own four-year time limit. The Tribunal concluded that the requirement in section 44(9) to make a repayment claim by amending an SDLT return is procedural and does not, by itself, prevent a taxpayer from making a separate claim under paragraph 34. The judgment is significant because it confirms that taxpayers who have missed the 12-month deadline for amending an SDLT return may still be able to recover overpaid SDLT through paragraph 34, provided they satisfy its applicable time limits, restrictions and procedural requirements.
Source: UT HRMC v Candy final decision pdf.
4. HMRC Clarifies Tax Adviser Registration Rules for Groups and Complex Business Structures
On 17 August 2026, HMRC updated its Mandatory Tax Adviser Registration Manual (MTAR10200) to clarify how the mandatory tax adviser registration requirement applies to groups and complex business structures. The guidance confirms that registration is generally not required where there is no genuine third-party commercial relationship, including where an organisation provides in-house tax advice on its own tax affairs or advises a client that is a group undertaking within the meaning of the Companies Act 2006. HMRC provides 13 non-exhaustive examples of circumstances where registration is not required, covering joint ventures, post-sale tax services provided to former group undertakings, in-house compliance work, professional services networks and investment structures, including funds, investee entities, investors and orphan special purpose vehicles. The guidance is transitional, with specific exemptions expected to be incorporated into Schedule 20 to the Finance Act 2026 in due course. Importantly, HMRC has confirmed that organisations acting in good faith and relying on the guidance to conclude that registration is unnecessary will be treated as compliant and will not face sanctions or penalties if it later transpires that registration was required. The update provides greater certainty for groups, partnerships, joint ventures, fund structures and professional services networks. However, as the examples are non-exhaustive, organisations whose arrangements are not expressly covered must assess whether their relationships are sufficiently similar to those between an adviser and its group undertakings, rather than genuine third-party commercial engagements, to fall outside the registration requirement.
Source: Mandatory Tax Adviser Registration
5. Taxation of Stablecoins and Other Cryptoassets
On 13 July 2026, HMRC published draft legislation for Finance Bill 2026-27 containing two separate measures on how stablecoins and common cryptoasset transactions are taxed.
Stablecoins
The first measure treats "eligible stablecoins" more like money for tax purposes. These are cryptoassets designed to hold a steady value against an ordinary currency, such as sterling or the US dollar, backed by reserves and intended for making payments. For individuals and trustees, disposals will be exempt from capital gains tax (CGT), and interest-like returns will be taxed as savings income. Companies will be taxed on stablecoins in the same way as on cash deposits and loans, under the loan relationship rules. The measure takes effect from 6 April 2027 for individuals and trustees and from 1 April 2027 for companies.
Cryptoasset loans and liquidity pools
The second measure covers all types of cryptoasset, not just stablecoins, but applies only to individuals and trustees, not companies, from 6 April 2027. Under current rules, lending tokens or putting them into a liquidity pool can count as selling them, triggering CGT even though the holder still owns the same investment in substance. The new rules treat these steps as "no gain, no loss", meaning no tax arises at that point, and CGT is instead postponed until the tokens are actually sold or exchanged.
Link to draft legislation: Stablecoins draft legislation pdf.
Link to policy paper: Taxation of stablecoins and Tax treatment of cryptoasset loans and liquidity pools
6. Salaried Members: Significant Influence Must Derive from Legally Enforceable Rights (Supreme Court)
On 1 July 2026, the Supreme Court ruled against BlueCrest, an asset management firm, in a long-running dispute with HMRC, which argued that most of BlueCrest’s LLP members should be taxed as employees rather than as partners (HMRC v BlueCrest Capital Management (UK) LLP[3]). Partners in an LLP are normally taxed as self-employed, which means no PAYE or employer National Insurance obligations arise on their profit share. The “salaried members” rules override this treatment where a member is, in reality, more like an employee. A member is taxed as an employee if they receive mainly fixed or salary-like pay, have no significant influence over the business, and have put in relatively little capital. Avoiding any one of these conditions is enough to stay outside the rules. The Court has now made clear that the ‘significant influence’ condition must be met through the member’s formal rights under the LLP agreement and its governance arrangements, such as a role or authority given to them under that framework. Influence that comes in practice from someone’s seniority, track record or client relationships does not count. Nor does control over day-to-day decisions in one part of the business: the influence needs to be over the LLP as a whole, typically at a management or strategic level. The Court also confirmed that discretionary bonuses linked to an individual’s or team’s own performance can be treated as salary for these purposes. The question of influence now goes back to the First-tier Tribunal to be decided on this basis. LLPs, particularly in financial services, should check whether their members’ influence is properly reflected in their governing documents and therefore whether their profit allocations could be treated as salary for tax purposes.
7. VAT Capital Goods Scheme: Computers Removed and Land Threshold Raised to £600,000
New VAT rules that took effect on 29 July 2026 make the VAT ‘capital goods scheme’ simpler. The scheme applies to expensive, long-life assets such as buildings. Businesses that make both VAT-able and VAT-exempt sales can usually only recover part of the VAT incurred on services and goods that they buy. Under the scheme, the VAT recovered on these assets is not fixed at the date of purchase but is reviewed each year for up to ten years (five for computers), so that it reflects how the asset is actually used over time. Computers and computer equipment are no longer (from 29 July 2026) covered by the scheme, and land and buildings will only be covered where the spend is at least £600,000 (up from £250,000). This means fewer assets need to be tracked, reducing paperwork for businesses. Assets where any of the relevant spend was incurred before 29 July 2026 stay under the old rules, which protects businesses that might otherwise have lost the benefit of future adjustments.
Source: The Value Added Tax (Amendment) Regulations 2026
8. Foreign Permanent Establishment Exemption to Become Mandatory
HMRC has published draft legislation that will change how, from 1 January 2027, UK companies are taxed on overseas branches (commonly referred to as ‘permanent establishments’ under tax rules). At present, a UK company can choose whether to exempt its overseas branch profits and losses from UK tax. This lets UK companies claim UK tax relief for early overseas losses while a branch is being set up, then opt out of UK tax once it becomes profitable. The aim of the reform is to remove that choice, so overseas branches are treated consistently and the UK no longer gives relief for losses on activities whose profits it will not tax. From accounting periods starting on or after 1 January 2027, the exemption will apply automatically. As a result, losses made by overseas branches will generally no longer be available to reduce UK tax, and transitional rules will limit the use of existing branch losses built up in recent years. New anti-avoidance rules, which already apply to arrangements made from 13 July 2026, are designed to stop companies sidestepping the change. UK companies with overseas branches should review their current loss positions and consider how the change will affect them.
Source: Corporation Tax — making the foreign permanent establishment exemption mandatory
9. Consultation on Simplifying Treaty Relief from Withholding Tax on Interest Paid Overseas
HMRC has consulted on making it easier for UK businesses to pay interest to overseas lenders without deducting UK tax. Currently, UK borrowers generally have to withhold tax at 20% on interest paid abroad. Tax treaties can reduce or remove this, but only once HMRC has given permission for each loan, which HMRC accepts can be slow, costly and complicated. The aim is to cut this red tape and the cash-flow cost for businesses, while protecting the tax base. Ideas being considered include letting borrowers apply the treaty rate themselves without waiting for HMRC approval (possibly only for lower-risk businesses), offering an option to get advance confirmation from HMRC, updating reporting requirements, and introducing penalties for getting it wrong. The government wants any changes to be cost-neutral. The consultation closed on 7 September 2026.
Source: Consultation on Simplifying Treaty Relief from Withholding Tax on Interest Paid Overseas
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