Tax Bites - August 2026

Welcome to the latest edition of RPC's Tax Bites – providing monthly bite-sized updates from the tax world.

News

HMRC updates its Construction Industry Scheme Guidance

HMRC has updated its Construction Industry Scheme Guidance to clarify the position that any contract that has construction operations in it, however small a part that may be, will fall within the scheme.

The update clarified that this also applies if someone agrees what work will be done, or pays for it, even if they are not the one carrying out the construction work. An example of this would be when a business agrees what repair work is needed and pays for it to be carried out by another party.  

HMRC publishes policy papers and draft legislation proposing reform to the tax treatment of stable coins and cryptoasset loans

HMRC has published two policy papers entitled Tax Treatment of Stablecoins and Cryptoasset loans and liquidity pools. Each policy paper is accompanied by draft legislation for inclusion in Finance Bill 2027.

If implemented, the legislation would treat stablecoins more like money. For individuals and trustees, disposals of eligible stablecoins will be exempt from Capital Gains Tax and certain interest-like returns from eligible stablecoins will be treated as savings income.  

In relation to cryptoasset loans, the legislation would defer Capital Gains Tax in certain circumstances until an economic disposal of the cryptoasset. 

HMRC updates its Digital Platform Guidance

HMRC has updated its Check if you need to register as a digital platform operator Guidance, to include examples of what HMRC considers a digital platform.

HMRC consider an app or website to be a digital platform if both of the following apply:

• it connects sellers to customers to supply goods or services, either directly on the platform, or indirectly by using third-party sellers of goods or services; and
• you hold or can easily calculate the amount paid to sellers for goods or services, or you can find out the amount from a third party.

HMRC has listed three examples that meet this definition:

1.  an app that allows users to buy and sell clothes online;

2.  a website which lets owners advertise to rent out homes; and

3.  software that allows customers to book taxis. 

HMRC updates its Employment Status Manual

HMRC has updated its Employment Status Manual (ESM4118) to include additional roles that HMRC consider should normally be treated as self-employed.

The roles are all relevant to the entertainment industry, specifically behind the camera roles in TV and radio.

Case reports

UT confirms that HMRC cannot adopt a 'blanket' approach when issuing a discovery assessment

In HMRC v Harte [2026] UKUT 112 (TCC), the Upper Tribunal (UT) rejected HMRC’s single assessment approach, holding that the gateway in section 29(3), Taxes Management Act 1970 (TMA), must be satisfied for each distinct loss of tax, and a deliberate or careless insufficiency cannot validate the inclusion of less culpable insufficiencies, or extend the time limits in section 36, TMA, to the assessment as a whole.

This decision has important consequences for the process HMRC is required to go through when issuing a discovery assessment. The UT has made it clear that HMRC must analyse each tax issue separately when making a discovery assessment and cannot simply aggregate all issues and apply the strictest rules across the board. This should ensure that taxpayers are not penalised for genuine mistakes made when taking reasonable care, or for issues that are out of time for HMRC to assess. Only those elements that satisfy the relevant statutory criteria can be included in a discovery assessment for earlier years.

The decision also means that HMRC must be more precise in its enquiries and when considering a taxpayer's behaviour. Each issue must be properly considered and supported by evidence. HMRC must address the facts and circumstances of each issue individually, rather than relying on broad arguments.

Read our commentary on Harte. 

FTT upholds £1m penalty for breach of stop notice

In Countrywide Partners Ltd v HMRC [2026] UKFTT 357 (TC), the First-tier Tribunal (FTT) dismissed an appeal by Countrywide Partners Ltd against a £1m penalty imposed by HMRC for breach of a stop notice requiring it to stop promoting certain tax avoidance arrangements.

The FTT confirmed that ‘promotion’, for present purposes, includes ongoing organisation and management activities, and not just new business and therefore activities involving the ‘running off’ of existing contractual arrangements can breach a stop notice.

The decision illustrates the FTT's strict approach to any failure to comply with a stop notice and confirms that penalties for failing to comply with stop notices are intended to be punitive. The amount of a penalty is therefore likely to be relatively significant in order to have a deterrent effect. 

Read our commentary on Countrywide Partners Ltd. 

FTT allows taxpayer's appeal and confirms unused trade losses can be reallocated to alternative reliefs

In Hector Lester v HMRC [2026] UKFTT 00323 (TC), the FTT allowed the taxpayer's appeal and confirmed that extended time limits for loss carry-back applied and that the appeal was valid, notwithstanding HMRC's failure to issue a formal notice of enquiry.

This decision confirms that taxpayers may, in appropriate circumstances, be permitted to reallocate unused trade losses to alternative reliefs.

It also indicates that trade loss claims may be implicitly revoked, amended or withdrawn, including where a taxpayer indicates an intention to apply the unused losses under different statutory relief provisions.

Read our commentary on Lester.

And finally …

Adam Craggs has recently written an article for Business & Accountancy Daily entitled 'HMRC recklessness conduct offence extends scope of powers'. The article considers, amongst other things, plans for a new criminal offence for giving reckless untrue statements or declarations to HMRC.