Tax Bites - May 2026

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

News

HMRC updates its internal manual on Construction Industry Scheme fraud

On 6 April 2026, significant changes to the Construction Industry Scheme (CIS) came into effect.

Contractors are liable for any lost tax, in addition to a penalty of up to 30% of the lost tax, if it is established that they "knew or should have known" that a transaction in their supply chain was connected to fraudulent tax evasion. The changes will also be relevant to individual directors and persons connected with the business, because they could also be liable to a penalty of up to 30% of any lost tax.

HMRC has updated its manual to reflect these changes, which can be viewed here.

UK government publishes a consultation on proposals to introduce new reporting requirements for close companies

The UK government has published a consultation on proposals to introduce new requirements for close companies to report transactions between the company and its participators, including:

• payments, via cash, bank transfer or otherwise
• sales of assets to the company
• purchases of assets from the company
• dividends or other distributions
• any other transfer of value from the company to the participator

The consultation can be viewed here.

UK government publishes a call for evidence on the taxation of stablecoins

Stablecoins are a type of cryptoasset that seek to maintain a stable value by reference to another asset, such as a fiat currency.

The UK government has published a call for evidence to obtain views on the issues around the tax treatment of stablecoins and the administrative burdens likely to be faced as the stablecoin market develops.

The call for evidence can be viewed here.

HMRC updates its Guidance on the Corporate Interest Restriction

HMRC has updated its Guidance on the Corporate Interest Restriction to reflect that, for accounting periods ending on or after 31 March 2026, reporting companies will only need to submit an interest restriction return if they want to:

• allocate disallowed amounts to specific companies in the group;
• carry forward unused interest allowance;
• claim a reactivation of amounts disallowed; or
• make an election in the return, such as the group ratio method.

HMRC's updated Guidance can be viewed here.

Case reports

Transfers from offshore bank account were taxable remittances

In Afzal Alimahomed v HMRC [2025] UKUT 00428 (TCC), the Upper Tribunal (UT) considered whether transfers from an offshore bank account and the use of an offshore credit card, were taxable remittances and allowed the taxpayer's appeal in part.

This decision provides helpful analysis on the meaning of 'money' and confirms that a bank transfer by a UK‑resident non‑domicile from their offshore account to a UK bank account of a NRP constitutes 'money… brought to the United Kingdom', for the purposes of section 809L, Income Tax Act 2007, and can be a taxable remittance.

The UT's decision also confirms that offshore credit card spending and 'relevant debts', under the remittance rules, is fact‑sensitive and this led the UT to set aside and remit those aspects of the appeal for reconsideration by the First-tier Tribunal (FTT).

You can read our commentary on the decision here.

UT finds that calculation error was not a “mistake in a claim” and allows SDLT overpayment relief appeal

In BTR Core Fund JPUT v HMRC [2026] UKUT 27 (TCC), the UT allowed the taxpayer's appeal, finding that an error in calculating Multiple Dwellings Relief (MDR), for SDLT, was not “by reason of a mistake in a claim”.

As MDR has been abolished, the significance of this decision is limited to those who have already claimed MDR and miscalculated their liability and are still in time to make an overpayment relief claim.

It is interesting to note that the FTT member, Julian Sims, issued a rare dissenting decision in this case (Judge Gauke had the casting vote) in which he agreed with the taxpayer that the relevant mistake was in the calculation of liability to tax rather than the claim itself, and the UT ultimately agreed with him. 

You can read our commentary on the decision here.

UT agrees with HMRC in mixed member partnership tax rules case

In Mark Benedict Holden v HMRC and HMRC v The Boston Consulting Group UK LLP and others [2026] UKUT 00025 (TCC), the UT considered the application of the mixed member partnership tax rules (the MMRs) and largely agreed with HMRC, holding that 'capital interests' issued to managing directors and partners of The Boston Consulting Group UK LLP, were taxable as income rather than as capital gains.

This decision is significant for professional service firms, particularly those using corporate members in partnership structures. Such firms should review their remuneration arrangements and consider the potential application of the MMRs in light of the interpretation of the relevant legislation adopted by the UT in this case.  

The UT's conclusions on the procedural issues are also worthy of note, highlighting that taking independent tax advice on its own is not always sufficient to avoid a finding of carelessness for the purposes of extended time limit assessments. 

Given the importance of the legislation considered in this case and the wider implications for other taxpayers, it will be interesting to see if the decision is appealed to the Court of Appeal. 

You can read our commentary on the decision here.

And finally … 

Adam Craggs and Liam McKay have published an article in Tax Journal focussing on the key developments in the contentious tax arena in the first quarter of 2026. The article reviews recent decisions on costs for unreasonable behaviour, the use of AI in litigation and the scope of the FTT’s jurisdiction, as well as increased HMRC criminal investigations into advisers.

You can read the article here.