Resources Type: News

Takeaway Owner Ordered To Repay More Than £70,000 After Luxury Spending: What This UK VAT And Bankruptcy Case Means For Small Businesses

Posted on by Farazia Gillani

In mid-February 2026, a former Portsmouth takeaway owner was ordered to repay more than £70,000 by the Crown Court after the Insolvency Service traced cash withdrawals and luxury spending that, in the authorities’ view, should have gone towards a substantial VAT debt. 

At Apex Accountants, we see cases like this as a hard warning for sole traders and hospitality businesses. VAT, cash flow, and record-keeping issues can escalate quickly. When they overlap with insolvency and alleged asset concealment, consequences can become criminal, not just financial. 

Why Was Takeaway Owner Ordered To Repay More Than £70,000

The UK VAT and bankruptcy case centres on Zhang Jin Chen (52), formerly the owner of the Fortune House takeaway in Portsmouth, run as a sole trader.  Key events reported by the Insolvency Service and published on GOV.UK include: 

  • The business was registered with HM Revenue and Customs in February 2012, but it was not registered for VAT at that time. 
  • HMRC visited in February 2020 and found evidence suggesting the business should have been VAT registered since December 2012 (meaning VAT should have been accounted for years earlier). 
  • In October 2020, Chen and his ex-wife sold their jointly owned home. Over the next two months, Chen withdrew large cash sums, including two withdrawals of £30,000 in November 2020. 
  • During November and December 2020, he spent more than £3,500 on products from Apple and a further £880 at Burberry shortly before Christmas. 
  • He applied for bankruptcy in July 2021, stating he knew he owed VAT but could not repay his debts. 
  • In May 2025, he received a 12-month prison sentence suspended for 18 months, after being found guilty of fraudulently disposing of property as a bankrupt under the Insolvency Act 1986. 
  • On 13 February 2026, at Portsmouth Crown Court, he was made subject to a confiscation order of £62,755 (payable within three months) plus £8,000 in costs—taking the total to more than £70,000. 
  • The Insolvency Service warned he could face 18 months in prison if he fails to pay, and that imprisonment would not wipe the debt. 

The Insolvency Service also reported that Chen signed a five-year Bankruptcy Restrictions Undertaking (BRU) which runs until March 2027, limiting borrowing and restricting certain public roles. 

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Why this Became a Criminal and Insolvency Matter

This story is not “just” about unpaid VAT. It sits at the intersection of VAT compliance, bankruptcy law, and criminal asset recovery. 

Fraudulent Disposal and Bankruptcy Restrictions

Under the Insolvency Act 1986, there are criminal offences relating to wrongdoing before and after bankruptcy, including “fraudulent disposal of property” in the five years leading up to bankruptcy. That legal framework is the basis the Insolvency Service referenced when reporting Chen’s conviction. 

A Bankruptcy Restrictions Undertaking (BRU) is essentially an agreement that imposes extended restrictions (often for 2 to 15 years in broader cases) without the matter necessarily going to court for a Bankruptcy Restrictions Order. GOV.UK guidance lists restrictions that can apply, including limits around obtaining credit over £500 without disclosure and restrictions on acting as a company director. 

Confiscation Orders and Why Prison Does Not Clear the Debt

Confiscation orders are made under the Proceeds of Crime Act 2002 (POCA) and can only be made by the Crown Court. They are not a sentence by themselves. They sit alongside a criminal sentence. 

Two points UK business owners often miss:

  • The court sets a time to pay, and it can also set a “default sentence” for non-payment. 
  • Serving a default sentence does not remove the obligation to pay. Government explanatory notes and prosecution guidance make clear the debt can remain outstanding. 

In this UK VAT and bankruptcy Case, the Insolvency Service stated that the £62,755 confiscation figure covered the HMRC debt plus an uplift to reflect today’s value of money. 

VAT Lessons for Takeaway and Hospitality Owners

Hospitality is high-volume and often cash-heavy. That can make VAT compliance more complex, not less. The Chen case also highlights how VAT liabilities can be assessed retrospectively when HMRC believes the registration threshold was exceeded years earlier. 

When you must register for VAT in the UK

As of the current rules reflected on GOV.UK, you must register for VAT if your taxable turnover in the last 12 months goes over £90,000, and you must register within 30 days of the end of the month you exceeded the threshold. 

That “rolling 12 months” point is critical. It does not reset at the end of the tax year. 

Record-keeping is not optional

If you are VAT registered, HMRC expects you to keep VAT records for at least six years in most cases. This is set out in VAT record-keeping guidance and GOV.UK VAT record rules. 

Making Tax Digital (MTD) makes this operationally stricter. VAT-registered businesses must keep VAT records digitally and file VAT returns using compatible software (with limited exceptions). 

A practical compliance checklist we recommend for hospitality businesses:

  • Track turnover monthly against the rolling 12-month VAT threshold, not calendar-year totals. 
  • Keep till reports, daily sales summaries, and bank deposit records, and reconcile cash takings to cash banked. This reduces risk in an HMRC visit or enquiry. 
  • Keep VAT records for the required retention period (typically six years). 
  • If VAT cashflow is tight, explore legitimate VAT accounting schemes (for example, the Cash Accounting Scheme) where eligible, to align VAT payments closer to when customers pay. 
  • If you cannot pay a tax bill on time, contact HMRC early. A payment plan may be possible, but HMRC will assess affordability and expects realism. 
  • Keep filing returns on time even if payment is difficult, because late submission carries its own penalty structure. 

How We Help With Managing VAT For Takeaway and Hospitality Businesses in UK

At Apex Accountants, we help UK sole traders and limited companies stay compliant, stay organised, and stay out of trouble. We also support businesses when problems have already started.

Our core VAT services for hospitality and owner-managed businesses include:

  • VAT registration reviews, including checking rolling 12-month turnover and the correct effective date of registration. 
  • VAT returns support and Making Tax Digital (MTD) set-up, so your records and filing process meet HMRC’s digital requirements. 
  • Bookkeeping systems for cash-heavy businesses, including processes to reconcile cash takings and strengthen audit trails. 
  • VAT record retention and compliance checks (including the six-year VAT record rule). 
  • Support engaging with HMRC early if you cannot pay on time, including preparing figures for a payment plan discussion. 
  • Practical advice when insolvency risk is rising, including signposting restrictions and responsibilities so you avoid conduct that regulators may treat as wrongdoing. 
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Conclusion

The February 2026 confiscation order against Zhang Jin Chen is a clear reminder that VAT debts do not disappear when a business faces financial pressure or enters bankruptcy. Investigators can trace transactions years later, and courts can order full repayment. In serious cases, enforcement can include a prison sentence, and the debt still remains payable.

For business owners, understanding VAT for takeaway and hospitality businesses in UK is essential. You must monitor the VAT threshold, register at the correct time, and keep accurate digital records in line with HMRC requirements. If cash flow becomes tight, early action is critical. Speaking to a qualified advisor can help you manage liabilities before they escalate into compliance issues or enforcement action.If you are unsure about your VAT position or worried about potential liabilities, it is always better to act early. Contact Apex Accountants today for practical, professional advice tailored to your business. You can call us or visit our website to discuss your situation in confidence.

UK Retailers Urge Consultation on Online VAT Reform

Posted on by Talha Zubair

A coalition led by the British Independent Retailers Association has asked HM Treasury to run a formal consultation on online VAT reform, focused on marketplace liability rules. 

The coalition’s concern is the “UK‑establishment” boundary. Today, marketplaces account for VAT in defined situations, mainly where the seller is not established in the UK. The letter argues that some overseas sellers exploit this by presenting themselves as UK‑established, which can mean VAT is not collected and compliant UK retailers are undercut. 

Bira says independent analysis suggests the leakage could be around £700 million a year. 

That £700 million estimate sits within a wider VAT compliance picture. HMRC’s preliminary estimate of the overall UK VAT gap for tax year 2024 to 2025 is 6.2% (a point estimate of £11.4 billion). 

The push is broad-based, with professional and industry bodies among the co-signatories, including the Association of Chartered Certified Accountants, the British Retail Consortium and the Chartered Institute of Taxation. 

The government has already signalled this is on the agenda. In Spring 2025, it said the 2021 reforms improved VAT compliance, but that compliance challenges remain and further reform will be explored through engagement with stakeholders. 

How VAT Online Marketplace Liability Rules Work in the UK Today

In practice, VAT liability turns on where the goods are at the point of sale, the consignment value, the customer type (consumer vs VAT‑registered business) and whether the seller is UK‑established. 

Key VAT online marketplace liability rules to know:

Low-value imports (goods outside the UK at sale): 

If the consignment is £135 or less, the marketplace must charge and account for VAT at the point of sale unless it is a B2B sale and the customer provides a valid UK VAT number. 

UK‑located goods sold by overseas sellers:

If an overseas business sells goods already in the UK via a marketplace, the marketplace is liable for VAT on goods of any value (subject to the business customer rules where a VAT number is provided). 

Invoices and records: 

HMRC guidance expects marketplaces to issue VAT invoices in many cases and keep records (including invoices) for six years. 

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Two enforcement levers matter for platforms:

“Reasonable steps” and evidence:

HM Revenue & Customs guidance published in June 2025 says marketplaces should take all reasonable steps to confirm whether a seller is established outside the UK, keep evidence, and may be assessed for outstanding VAT if the liability is applied incorrectly and evidence is not there. 

Joint and several liability (“knew or should have known”):

HMRC may hold a marketplace liable where it knew or should have known an overseas seller should register for VAT but had not, and the marketplace did not stop the seller trading within the required timeframe. 

In parliamentary answers, the Treasury has said the 2021 changes were designed to level the playing field and improve compliance. It also cited an Office for Budget Responsibility certified analysis estimating the measures (with the abolition of Low Value Consignment Relief) will raise £1.8 billion per year by 2026–27. 

Where Retailers and Watchdogs Say the System is Being Exploited

The risk is not “no rules”. It is the gap between what the rules assume and what platforms can verify in real time.

The National Audit Office has said HMRC has raised more tax from online retail by making marketplaces liable for VAT on overseas sellers’ sales, but that significant weaknesses remain, particularly the ability of overseas businesses to falsely represent themselves as UK‑established. 

The Public Accounts Committee has also highlighted that overseas sellers can evade VAT by falsely presenting themselves as UK‑established, and that marketplaces must determine the correct liability or demonstrate reasonable steps. 

HMRC’s evidence to the Committee indicates active enforcement. It states that, where HMRC considers a marketplace has not taken all reasonable steps to verify a seller’s establishment, VAT assessments have been (or may be) issued. 

For compliant sellers, the commercial effect is straightforward. If one seller charges VAT correctly and another does not, the price distortion can be immediate. 

What a Treasury Online VAT Reform Consultation Could Change

The coalition is asking the Treasury to consult on extending marketplace liability rules, so platforms become responsible for VAT more broadly and the “false UK establishment” route is closed. 

An online VAT reform consultation is likely to focus on four practical design choices.

  • A broader deemed‑seller model. One option is to make the marketplace the default VAT collection point for UK consumer goods sales it facilitates, regardless of where the seller claims to be established. 
  • Protection for micro sellers. The coalition suggests excluding unregistered sellers so that small firms below the VAT threshold are not pushed into disproportionate admin. The VAT registration threshold has been £90,000 since 1 April 2024. 
  • Clearer expectations on checks and evidence. HMRC’s guidance lists examples of checks (VAT number matching, companies’ data, financial signals). Government could decide whether parts of this should become mandatory for larger platforms. 
  • Alignment with low-value imports reform. In January 2026, HM Treasury and HMRC opened a consultation on reforming the customs treatment of low-value imports and explicitly flagged possible VAT collection changes to align with new customs arrangements. 

How We Can Help Retailers

Apex Accountants help retailers and online sellers stay compliant and protect margin.

We typically support clients with:

  • VAT registration planning and threshold monitoring.
  • Marketplace VAT reviews (including the £135 consignment rule).
  • Evidence packs for seller “establishment” checks and platform KYC.
  • VAT returns, reconciliations and Making Tax Digital processes.
  • Support with HMRC enquiries, assessments and remediation.
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Conclusion

The February 2026 coalition letter is a clear signal that online VAT enforcement alone may not be enough. Both industry groups and public bodies have pointed to the same pressure point: overseas sellers who can present themselves as UK‑established, shifting liability away from marketplaces and creating VAT leakage. 

A formal Treasury consultation would allow the government to test whether extending marketplace liability, with safeguards for micro sellers, is the cleanest route to fair competition and better compliance in UK e-commerce. 

FAQs on VAT Reform   

1. Do I need to register for VAT if I sell online? 

You must register if taxable turnover exceeds £90,000 over a rolling 12 months. Some sellers register voluntarily, but there should be a cashflow plan. 

3. When does the marketplace charge VAT instead of me? 

Broadly, for low value imports (≤£135) sold to consumers and for goods already in the UK sold by overseas sellers via a marketplace, the marketplace accounts for VAT. 

4. What does “reasonable steps” mean? 

HMRC does not prescribe a single checklist. It expects marketplaces to decide what is appropriate, keep evidence, and be able to justify actions if challenged. 

5. Can a marketplace be liable for a seller’s unpaid VAT? 

Yes. HMRC can apply joint and several liability approaches and expects marketplaces to act when an overseas seller should be registered but is not. 

6. Can the marketplace remove me if I do not provide VAT details? 

HMRC guidance says marketplaces may remove sellers who do not provide a valid VAT number when required or where the trading account name cannot be matched with VAT registration details.

UK Buy-To-Let is Going Corporate As Landlords Respond To Tax Pressure

Posted on by Farazia Gillani

In the UK private rented sector, the big structural shift is no longer just “landlords selling up” or “rents rising”. It is how landlords are buying and holding property: increasingly through limited companies rather than personal names. This trend is particularly evident in the UK buy-to-let market, where tax and financing pressures are reshaping how investors structure their portfolios.

The newest incorporation figures point to a market that is still accelerating. Hamptons (using Companies House records) reports that:

  • 66,587 new buy-to-let companies were formed in 2025, a new annual record. That is 8% higher than 2024 and 363% higher than a decade earlier. 
  • The pace continued into 2026, with 5,922 new buy-to-let limited companies created in January 2026, 11% higher than January 2025. 
  • By the end of 2025, there were around 443,272 active buy-to-let companies on the register—nearly five times the 2016 figure quoted in the same analysis. 

For information on the mansion tax impact on your property, read: Analysing the Impact of Mansion Tax on the Prime Property Market in UK

The Shift Towards Corporate Ownership in the UK Buy-to-Let Market

This is not a niche move by “mega landlords”. It is now the dominant route for many new investor purchases. Hamptons says around three-quarters of new buy-to-let purchases are being made through limited companies, and trade reporting puts it as high as around four-fifths. 

On ownership, the shift is visible in land title data too. Across England and Wales, 755,042 property titles are now held by buy-to-let companies, up from 272,964 around a decade earlier. Hamptons estimates that this corresponds to roughly 1.5 million rental homes held inside limited company structures. 

At the same time, investors are actually a slightly smaller slice of overall home purchases than a year ago. Hamptons puts investors’ share at 10.8% of purchases in 2025, down from 11.9% in 2024. The takeaway is simple: fewer purchases are “landlord purchases” overall, but a larger share of landlord purchases are corporate. 

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Why Landlords Are Incorporating Now

From an accountancy standpoint, the surge is not mysterious. It is the combined effect of tax rules, fiscal drag, borrowing costs, and upcoming regulation.

Mortgage Interest Relief Changes

Mortgage interest relief rules changed the baseline. Since April 2017, tax relief for finance costs on residential property for individuals has been restricted and was fully in place by April 2020.

In practice:

  • Individual landlords can no longer deduct mortgage interest fully from rental income
  • Relief is now limited to the basic rate via a tax reduction

For landlords with significant borrowing, this creates pressure:

  • Taxable income may appear higher than actual cash profit
  • Some landlords are pushed into higher tax bands

This has made the traditional personal ownership model less tax efficient.

Fiscal Drag and Frozen Tax Thresholds

Frozen income tax thresholds are quietly increasing tax burdens.

  • Personal allowance: £12,570
  • Higher-rate threshold: £50,270

These thresholds have been frozen for several years.

When income rises but thresholds stay the same:

  • More landlords move into the 40% tax band
  • Overall tax liability increases without real growth in profits

This effect is widely referred to as fiscal drag.

Corporation Tax Advantage

Limited companies are taxed differently.

  • 19% corporation tax on profits up to £50,000
  • 25% corporation tax on profits above £250,000
  • Marginal relief applies between these limits

Compared with:

  • 40% income tax for higher-rate individual landlords

This creates a strong incentive to operate through a company, especially for landlords with larger portfolios or higher incomes.

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Impact of Rising Borrowing Costs

Higher mortgage rates have also played a role.

  • Individual landlords face restricted interest relief
  • Company landlords can still deduct full finance costs

This means:

  • Companies often show lower taxable profits
  • Cash flow can be more manageable under a company structure

For leveraged investors, this difference is significant.

Dividend Tax Changes from April 2026

Tax efficiency does not end at corporation tax.

Many landlords take profits out of their company through dividends. However, changes from April 2026 will affect this:

  • Ordinary rate increases from 8.75% to 10.75%
  • Upper rate increases from 33.75% to 35.75%
  • Additional rate remains at 39.35%

This means:

  • Taking profits out becomes more expensive
  • Retaining profits within the company becomes more attractive

Reinvest vs Withdraw Strategy

The right structure now depends heavily on how profits are used.

  • If profits are reinvested, a company structure can remain efficient
  • If profits are withdrawn regularly, the tax advantage may reduce

There is no single “best” option. Each landlord’s position must be reviewed individually.

For insights on reducing tax through capital allowances, read our article: How to Claim Capital Allowances on Commercial Property in the UK.

Limited Company Versus Personal Name: The Tax Reality

At Apex Accountants, we see the same misconception again and again: “A limited company always reduces tax.” It can, but only when the numbers and the landlord’s goals line up. 

Here is the clean way to think about it.

If you hold buy-to-let personally:

  • Rental profit is subject to income tax. For many landlords in Great Britain, the relevant bands are 20%, 40% and 45%, with the personal allowance tapering away above £100,000 and reaching zero at £125,140. 
  • Mortgage interest relief is restricted for individuals, phased in from 2017 and fully implemented from 2020. 
  • When you sell an investment property, capital gains tax applies for individuals. From April 2025 onwards, residential property gains are taxed at 18% (basic-rate band) and 24% (higher/additional-rate band). 

If you hold a buy-to-let limited company:

  • Rental profit is subject to corporation tax (19%/25% with marginal relief, depending on profit levels). 
  • Mortgage interest is generally treated as a business expense in computing taxable profits. This is the practical contrast that keeps coming up in landlord incorporation commentary following the finance cost restriction for individuals. 
  • Tax does not stop at corporation tax if you want the money personally. If you extract profits, dividend tax rules apply (and the headline rates increase from April 2026 as noted above). 
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What usually makes the buy-to-let limited company route work best

  • You are a higher-rate taxpayer (or close to it) because of employment income plus rents, and your borrowing costs are meaningful. 
  • You plan to leave profits inside the company to repay debt or fund the next purchase, rather than drawing everything each year. 
  • You want a structure that supports co-investment more cleanly. Hamptons-linked reporting highlights a growing share of buy-to-let companies with multiple shareholders. 

When personal ownership can still be better

  • Your total income keeps you firmly in basic rate, and your borrowing is modest. (The finance-cost restriction tends to bite hardest at higher-rate levels.) 
  • You rely on rental profits for day-to-day living costs. In that case, the “second layer” tax on extraction becomes more relevant—especially with dividend rate rises. 
  • Your portfolio is small enough that the compliance cost and admin time outweigh the marginal tax gains. Hamptons also flags Companies House filing fees rising faster than inflation in recent years. 

Costs, Traps and Compliance That Many Landlords Underestimate

The incorporation trend is clear. However, it is not frictionless. Many landlords focus on tax savings, but the real risks often sit in three areas: transferring properties, ongoing costs, and regulatory changes that affect income.

Transferring Properties into a Company

Moving property into a limited company is not a simple administrative step.

In most cases, HMRC treats transfers between connected parties at market value. This applies even where no money changes hands.

In practice, this can trigger two immediate tax exposures. The individual may face Capital Gains Tax on the disposal, while the company may be liable for Stamp Duty Land Tax based on the market value. In addition, higher rates for additional properties often apply.

These combined costs can be substantial and need to be calculated carefully before any transfer.

Incorporation Relief and Practical Limitations

In certain cases, Incorporation Relief can defer Capital Gains Tax. This applies when a business is transferred as a going concern in exchange for shares.

However, the key issue is whether a buy-to-let portfolio qualifies as a “business”. This is a fact-sensitive area. HMRC looks at the level of activity, not just ownership of properties.

For many landlords, the answer is not straightforward. This is why tax modelling and proper documentation are essential before proceeding.

Rising Company Running Costs

The idea that property companies are cheap to run is becoming outdated.

Companies House fees have increased, with incorporation fees doubling and confirmation statement fees rising. These changes reflect wider regulatory reforms and identity verification requirements.

Alongside these, landlords must factor in accountancy fees, annual filings, and ongoing compliance. Over time, these costs can become significant, especially for smaller portfolios.

Get practical guidance on managing SPV finances in Cloud-Based Bookkeeping for SPVs for Property in the UK.

SDLT Rules for Company Purchases

Stamp Duty Land Tax rules are stricter for companies than for individuals.

Companies purchasing residential property generally pay higher rates. In some cases, particularly for higher-value properties, a rate of up to 17% can apply.

Recent changes have also removed some planning opportunities. Multiple Dwellings Relief was withdrawn from June 2024, and large acquisitions are now treated differently under non-residential rules.

This makes upfront cost planning even more important when acquiring property through a company.

Changing Tenant Law and Rent Controls

Regulation is also changing how landlords manage their income.

Under the Renters’ Rights reforms, rent increases will follow a single, more structured process. In most cases, rent can only be increased once a year, with at least two months’ notice, using the statutory procedure.

Tenants will also have the right to challenge increases through the First-tier Tribunal. The tribunal will assess whether the rent reflects the market level, and landlords will not be able to backdate higher rents following a challenge.

These changes are designed to make rent setting more transparent, but they also introduce new constraints for landlords.

Impact on Cashflow and Rent Strategy

These regulatory changes have direct implications for cashflow.

Landlords now need to be more precise when setting rents. Increases must reflect market conditions from the outset, as adjustments later may be challenged.

Recent market data reflects this shift. Newly-let rents have slightly declined, while renewal rents have continued to rise, although at a slower pace. This suggests that landlords are becoming more cautious and aligning rents more closely with market levels.

Why Landlord Tax Planning Matters More Than Ever

Incorporation can still be effective in the right circumstances. However, it is not a simple decision based on headline tax rates.

You need to consider the full picture, including transfer costs, ongoing compliance, financing, and how you plan to use the income.

Without careful planning, the structure can create unexpected tax charges or reduce overall efficiency. A detailed review is essential before making any changes.

How Apex Accountants Can Help

At Apex Accountants, we approach landlord incorporation and portfolio structuring as a numbers-led exercise. Not a trend-led one.

Our day-to-day work in this space typically includes:

  • Personal vs limited company modelling

We run side-by-side forecasts using current income tax thresholds, corporation tax bands, and the post-2017 finance cost rules. 

  • Incorporation planning for existing portfolios

We assess exposure to SDLT and capital gains calculations, and we review whether reliefs like Incorporation Relief are even in scope given HMRC’s conditions. 

  • Company compliance built for property businesses

Confirmation statements, statutory accounts, director/shareholder housekeeping, and practical support around the continuing Companies House reforms and fee changes. 

  • Rent and tenancy change readiness

We help landlords understand how rent-setting and cashflow could shift under the Renters’ Rights framework, particularly around annual rent increases and the tribunal challenge process. 

  • Ongoing landlord tax planning support

Self Assessment for individuals, corporation tax for property companies, and profit extraction planning in light of the upcoming dividend tax rate changes. 

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Conclusion

The headline numbers tell the story: 2025 set a record for buy-to-let company formations, and January 2026 suggests the trend is not cooling. The drivers are structural. Restricted finance cost relief for individuals, frozen thresholds pulling more landlords into higher-rate tax, and the gap between personal and corporate tax treatments are all influencing decisions.

But “incorporate” is not a universal answer. It is a strategy with trade-offs. There can be SDLT and capital gains implications when transferring existing properties, higher ongoing admin costs, and a second layer of tax when profits are extracted. From April 2026, dividend tax rates will increase, which makes planning even more important.

You can contact Apex Accountants to discuss your position and get clear, tailored advice on the most suitable structure for your circumstances.

Smith v HMRC – Follower Notice Penalties and the Montpelier Tax Scheme

Posted on by Farazia Gillani

Matthew Smith’s recent loss at the first-tier tribunal (tax chamber) is a reminder that UK tax authorities expect taxpayers to actively resolve disputed tax positions. Smith’s case centred on a marketed tax avoidance scheme, the Montpelier tax scheme, promoted by Montpelier Tax Consultants. The scheme routed his earnings through an Isle of Man partnership and trust to claim UK–Isle of Man double‑taxation relief. HMRC concluded that the arrangement failed and issued Smith with follower notices and accelerated payment notices for tax years 2004/05–2007/08. When he did not take the corrective action required by the notices, HMRC assessed penalties. The tribunal dismissed Smith’s appeal, holding that his failure to act was not reasonable.

Background – The Montpelier Tax Scheme and HMRC’s Response

Montpelier tax scheme

Smith, an IT consultant, joined a scheme marketed by Montpelier Tax Consultants, which sought to exploit the UK–Isle of Man double‑taxation arrangements. Earnings were routed through an Isle of Man partnership and an Isle of Man trust; the offshore trust income was declared on Smith’s UK tax returns, and he claimed equivalent double‑taxation relief. HMRC argued that the scheme was ineffective following the FTT decision in the Huitson case.

Enquiries and closure notices

HMRC opened enquiries into Smith’s returns and in 2010 issued closure notices stating that additional income tax and National Insurance contributions (NICs) were due. Montpelier appealed the closure notices on his behalf.

Follower and accelerated payment notices (FNs & APNs)

After the Huitson decision became final, HMRC wrote to Smith on 18 October 2016, explaining that follower notices and accelerated payment notices would be issued. The notices (sent on 4 November 2016) warned that he must take corrective action by 7 February 2017 or face penalties. A reminder was sent on 23 December 2016.

For the latest on HMRC investigations, read: HMRC Fines Estate Agents, Highlighting AML Failures—What It Means for You

Multiple deadlines and failure to act

Further letters in October 2017 and October 2018 extended the deadline for taking corrective action. Smith, relying on Montpelier’s advice, challenged the notices but did not amend his tax returns or enter into an agreement with HMRC. His final deadline of 31 October 2018 passed with no corrective action. HMRC therefore issued follower‑notice penalties (FNPs) on 14 August 2019 and offered a review, which eventually reduced the penalties to exclude NICs and apply a 20% co‑operation reduction.

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What is a Follower Notice?

A follower notice is a tool introduced in the Finance Act 2014 that allows HMRC to resolve avoidance cases quickly once a representative case has been decided. HMRC may issue a follower notice where a return or appeal claims a tax advantage and HMRC considers that a judicial ruling is relevant. Recipients must take corrective action (amend returns or agree with HMRC to relinquish the claimed tax advantage) within a specified time.

A follower notice penalty is charged when a taxpayer fails to take corrective action. The penalty can be up to 50% of the denied tax advantage. HMRC may reduce the penalty for co‑operation, but reductions cannot reduce the penalty to less than 10% of the denied advantage. Fact sheets published by HMRC explain that the base penalty is 30% of the denied advantage and can be reduced if the taxpayer assists HMRC.

Grounds of appeal against an FNP are limited. Section 214 of the Finance Act 2014 allows appeals only where conditions for issuing the follower notice were not met or where it was reasonable in all the circumstances not to have taken corrective action.

Smith’s Appeal and Arguments

Smith represented himself at the tribunal. He argued that:

Similarities with Baker case

He relied on the successful appeal of Roy Baker, another Montpelier client. In Baker v HMRC, the FTT cancelled follower‑notice penalties because mistakes and inconsistencies in HMRC’s dealings led the tribunal to conclude it was reasonable for the taxpayer to rely on Montpelier’s advice.

Reliance on Montpelier and lack of expertise

Smith contended that, as someone without tax expertise, it was reasonable to rely entirely on Montpelier’s advice, and he had no reason to doubt it.

Confusing correspondence and delays

He claimed HMRC’s notices were hard to understand and that delays and contradictory advice, including the lengthy review process, should be taken into account. He also mentioned financial pressures and mental‑health issues.

HMRC argued that the follower notices were validly issued and that there were fundamental differences between Smith’s situation and the Baker case. They maintained that Smith failed to take corrective action despite multiple opportunities and requested that the tribunal uphold the penalties with a 20% co‑operation reduction.

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Tribunal’s Findings and Reasoning

Failure to engage with HMRC

The tribunal found that Smith did not properly read HMRC’s letters or factsheets until 2018 and did not fully engage with his tax position until May 2019. He therefore did not understand the difference between follower notices and accelerated payment notices, the potential penalties, or what corrective action meant.

Smith relied entirely on Montpelier’s advice until March 2018 and then relied on a contact at HMRC (RW) to assure him there was nothing further to pay. The tribunal concluded that such reliance without attempting to understand or seek independent advice was unreasonable. Unlike the Baker case, there were no significant HMRC errors, and Smith did not deliberately decide to continue the appeal; he simply failed to act.

Reasonableness of not taking corrective action

The tribunal analysed whether it was reasonable, in all the circumstances, for Smith not to take corrective action. It noted that the standard is objective and depends on the taxpayer’s individual circumstances.

Key points:

Failure to read and understand

Smith admitted he had been given three opportunities to take corrective action and acknowledged that penalties would arise if he failed. His confusion stemmed from not reading or understanding the correspondence and not seeking advice.

Reliance on Montpelier vs independence

The tribunal recognised Smith’s lack of tax expertise but said his complete reliance on Montpelier until March 2018 and subsequent failure to read HMRC’s letters meant he did not engage with his tax position. He only sought independent advice when he appointed new advisers in December 2019.

Payment plan confusion

He argued that the payment plan for the accelerated payment notices covered all liabilities. The tribunal found that paying accelerated payments does not amount to corrective action and that Smith would have understood this if he had properly read the correspondence.

Delays and mental‑health issues

While HMRC’s delay in concluding the review (over four years) was unfortunate, it had no bearing on whether Smith acted reasonably; he provided no evidence linking mental‑health issues to his failure to act.

The tribunal concluded that Smith did not demonstrate that it was reasonable not to take corrective action. The follower notices were validly issued, and he failed to act before the deadline, so the appeal against the penalties was dismissed.

Read About: Understanding HMRC Penalty Suspension Requests: Insights from the Cox v HMRC Case

Penalty calculation

HMRC initially calculated the follower‑notice penalties at 50% of the denied income tax and NICs, totalling £42,369.80. During the review they removed the NICs element and applied a 20% co‑operation reduction under the Finance Act 2014, reducing the penalty percentage to 42%. The revised penalties totalled £32,541.32. The tribunal agreed with HMRC’s assessment, noting that Smith’s limited assistance did not justify a greater reduction. A breakdown of the final penalties is shown below:

Tax yearValue of denied advantagePenalty ratePenalty
2004/05£20,003.5642%£8,401.49
2005/06£24,529.7742%£10,302.50
2006/07£14,333.2942%£6,019.98
2007/08£18,612.7642%£7,817.35
Total£77,479.3842%£32,541.32
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Lessons and Implications

The decision underscores several important points for taxpayers and advisers:

  • Read and engage with HMRC correspondence – Follower notices and associated fact sheets clearly set out deadlines and consequences. Failing to read them or seek clarification is unlikely to be considered reasonable.
  • Do not rely solely on scheme promoters – Montpelier and similar promoters have a vested interest in defending their schemes. The tribunal noted that Smith acted like a “post box”, forwarding Montpelier’s letters without understanding them. In contrast, in the Baker case, the taxpayer had a genuine reason to mistrust HMRC because of multiple errors.
  • Corrective action differs from payment of APNs – paying accelerated payments does not counteract the denied advantage. Corrective action requires amending returns or agreeing with HMRC to give up the claim.
  • Co‑operation can reduce penalties – HMRC has discretion to reduce follower‑notice penalties based on the quality of the taxpayer’s co‑operation, including helping quantify the tax advantage or counteracting it. Even limited co‑operation can secure a reduction; Smith’s penalties were reduced from 50% to 42%.
  • Appeal rights are narrow – Section 214 FA 2014 provides limited grounds for appealing follower‑notice penalties. Taxpayers must show that HMRC incorrectly issued the notice or that failure to take corrective action was reasonable. Evidence and proactive engagement are critical.

How We Can Help

Apex Accountants helps individuals and businesses navigate complex tax legislation and compliance. Our services include:

  • Tax investigations & disputes – guiding clients through HMRC enquiries, follower notices, accelerated payment notices and settlement negotiations.
  • Tax compliance & planning – ensuring returns are accurate, compliant and optimised while avoiding the pitfalls of aggressive schemes.
  • Contractor advisory services – advising on off‑payroll/IR35 status, double‑taxation agreements, and cross‑border structures.
  • Appeals & litigation support – preparing evidence, drafting grounds of appeal and liaising with specialists to challenge penalties where appropriate.
  • Regular updates & training – providing clients with updates on developments like the Montpelier scheme litigation and helping them understand their obligations.

If you have received a follower notice or are involved in a tax avoidance scheme, our team of experienced advisers can assess your situation and help you take the right corrective action.

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Conclusion

The Smith v. HMRC decision underscores that follower notices are serious warnings, not mere formalities. Taxpayers who ignore them or leave matters entirely to scheme promoters risk substantial penalties. Smith’s reliance on Montpelier, failure to read HMRC’s correspondence, and failure to act after multiple deadlines led the tribunal to dismiss his appeal. By contrast, the tribunal in Baker cancelled penalties where HMRC had made multiple errors. The case highlights the importance of engaging with HMRC, seeking independent advice, and taking prompt corrective action when tax avoidance arrangements are challenged.

HMRC Update: HMRC has launched a £40 million enforcement campaign targeting sellers on Vinted and eBay.

FAQs

1. What is the Montpelier tax scheme?

The Montpelier scheme routed contractors’ earnings through an Isle‑of‑Man partnership and trust to claim double‑taxation relief. HMRC considered the arrangements ineffective after the Huitson case, and many users received follow-up notices requiring them to give up the tax advantage.

2. What is a follower notice penalty?

A penalty is charged when a taxpayer who has been issued a follow-up notice fails to take corrective action by the deadline. The maximum penalty is 50% of the denied advantage, though HMRC can reduce it for co‑operation. HMRC’s guidance states that the standard penalty is 30%.

4. How do follower notices differ from accelerated payment notices?

Accelerated payment notices (APNs) require taxpayers to pay disputed tax upfront while the dispute is resolved. Follower notices require them to give up the disputed tax advantage and amend returns; paying an APN does not count as corrective action.

5. What counts as corrective action?

Under section 208 FA 2014, corrective action means amending the tax return to remove the advantage or agreeing in writing with HMRC to relinquish it. The taxpayer must also notify HMRC that they have done so.

6. Can I appeal a follower notice penalty?

Yes, but only on specific grounds. Section 214 FA 2014 allows an appeal where HMRC failed to meet conditions for issuing the follower notice or where it was reasonable not to have taken corrective action. The appeal must normally be filed within 30 days.

7. How was the Baker case different?

In Roy Baker v HMRC, the FTT cancelled the penalties because HMRC’s numerous mistakes and inconsistent advice meant the taxpayer had good reason to trust his advisers and doubt HMRC. In Smith’s case, there were no similar errors, and he failed to engage with his tax affairs.

HMRC Fines Estate Agents, Highlighting AML Failures—What It Means for You

Posted on by Farazia Gillani

In February 2026, HM Revenue & Customs (HMRC) published its latest list of businesses that breached the Money Laundering Regulations. The update covers the period from 1 April to 30 September 2025 and shows that a total of 369 penalties were issued across all supervised sectors. The combined value of the fines reached £1.88 million. Estate agencies were the worst‑affected sector—HMRC fines estate agents the most, with 170 penalties levied against estate agency businesses, amounting to £835,842. Accountancy service providers were the second-largest group fined, receiving 134 penalties worth £513,930.

HMRC data shows that the majority of penalties arose because businesses traded without being registered for anti-money-laundering (AML) supervision. 332 of the 369 penalties were for unregistered trading, and the same pattern was highlighted in the specialist press. In many cases, businesses missed registration deadlines; registration failures are administrative issues that are avoidable. HMRC’s spokesperson stressed that AML supervision is “a vital line of defence” and that enforcement will continue.

Read: HMRC has launched a £40 million enforcement campaign targeting sellers on Vinted and eBay.

Why are estate agents being fined?

Estate agents are regulated under the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017. HMRC identified several recurring compliance failures, which have led to HMRC AML fines being imposed on businesses that failed to meet the necessary regulatory standards.

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  • Failure to register or renew registration on time: Over 90% of recent HMRC money laundering penalties were for trading while unregistered. Estate agents must register with HMRC before conducting estate agency work and renew annually.
  • Poor customer due diligence (CDD): Agents failed to verify the identity of buyers and sellers or establish the source of funds. HMRC guidance emphasises that estate agency businesses must carry out robust CDD and enhanced due diligence where risks are higher.
  • Weak or outdated risk assessments: Businesses are required to maintain a written risk assessment covering money laundering, terrorist financing, and proliferation financing. Some firms rely on generic templates rather than assessing the actual risks posed by their client base.
  • Inadequate policies, training, and records: The regulations demand that agents have documented policies and procedures, train staff to recognise red flags, and keep records for at least five years. HMRC inspections have found incomplete records and a lack of staff training.
  • Failure to appoint a nominated officer (Money Laundering Reporting Officer): Each agency must appoint an MLRO and a deputy to handle suspicious activity reports. Many smaller firms overlook this requirement.

Also Read: Investors are at risk of tax fines due to the HMRC Capital Gains Tax Glitch

Broader risks in the property sector

Property transactions have long been a magnet for illicit funds. The National Risk Assessment 2025 notes that property transactions appear in almost every money laundering typology and predicate offence. The property sector overall is assessed as high-risk, with estate agents among the most exposed professions. Criminals use complex corporate structures, trusts, or special-purpose vehicles to hide beneficial ownership and move large sums. Super-prime property (worth £5 million in London or £1 million elsewhere) and residential property are considered particularly attractive to launderers.

Best-practice AML compliance for estate agents

HMRC and professional bodies outline steps that estate and letting agencies should take to stay compliant:

  • Perform a written risk assessment—identify money laundering, terrorist financing, and proliferation financing risks based on customers, geographic areas, services offered, and transaction size. Keep the assessment current and document the reasoning behind each risk rating.
  • Develop policies, controls, and procedures—Create a written AML policy that sets out how risks will be managed and update it when regulations change.
  • Train your team—ensure all staff understand the regulations, know how to perform CDD, and recognise suspicious activity. Record training sessions and refresher courses.
  • Appoint an MLRO and deputy—they must review internal reports and submit suspicious activity reports to the National Crime Agency without tipping off the client.
  • Register and renew with HMRC – Register before you start trading and renew annually. Provide generic email addresses so renewal reminders are not missed.
  • Conduct customer due diligence – Verify identity, check beneficial ownership of companies, and confirm the legitimacy of funds. Apply enhanced due diligence when dealing with politically exposed persons, higher-risk countries, or complex corporate structures.
  • Keep records – Keep copies of identity documents, risk assessments, and transaction files for at least five years.
  • Use technology wisely – Adopt reliable ID verification and sanctions screening tools. Document why you chose each tool and ensure your systems are calibrated to UK sanctions lists and AML regulations.
  • Audit yourself – Run mock HMRC audits annually to identify gaps. Independent reviews can highlight weaknesses in policies and training.
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The Wider HMRC AML Fines and Regulations

Changes in 2025 and 2026 mean that AML compliance is evolving. May 2025 introduced mandatory sanctions checks for all letting and estate agents, meaning firms must screen every client against UK sanctions lists. In January 2026, the UK government consolidated sanctions designations into a single list to simplify checks. There are also proposals to refine the money laundering regulations to be more targeted and risk‑based; the direction of travel suggests stronger expectations for high‑risk areas.

At the same time, risk assessments show that criminals increasingly use super-prime property, corporate structures, and special-purpose vehicles to launder money. Estate agents therefore need to understand complex ownership structures and ask probing questions about the source of funds.

Read: Understanding HMRC Penalty Suspension Requests: Insights from the Cox v HMRC Case

How We Help Estate Agents Stay Compliant and Avoid HMRC Money Laundering Penalties

Apex Accountants supports estate agents, letting agents, and property professionals in meeting their AML obligations. Our specialist team combines accounting expertise with deep knowledge of AML regulations.

  • Registration and renewal assistance – We handle HMRC registration, renewals, and “fit and proper” tests to ensure you are correctly supervised.
  • Risk‑assessment workshops – Our consultants help you develop tailored risk assessments that reflect your business model and client base. We provide templates and walk you through risk factors identified by HMRC.
  • Policy drafting and implementation – We write clear AML policies, controls, and procedures and assist with implementation across your branches.
  • Staff training – We offer face-to-face training and online modules covering CDD, enhanced due diligence, sanctions screening, and reporting obligations. Training is recorded for audit purposes.
  • Mock audits and compliance reviews—Our independent reviews identify weaknesses before HMRC does. We test your processes, document findings, and help implement corrective actions.
  • Ongoing support—Our helpline provides prompt advice on complex transactions, suspicious activity reporting, and changes in the law. We also monitor regulatory updates and notify you of relevant changes.
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Conclusion

HMRC’s latest enforcement action shows that AML compliance is not just a regulatory box‑ticking exercise—it is a crucial defense against criminals exploiting the UK property market. More than 170 estate agency businesses were fined in the latest reporting period, mostly for administrative failings such as failing to register with HMRC. Yet the risk of money laundering in property remains high; the National Risk Assessment 2025 warns that property transactions are used in almost every money laundering typology.

For estate agents, the message is clear: register, assess your risks, train your team, and keep records. By embedding robust AML procedures and staying on top of regulatory changes, firms can protect their reputation, avoid costly fines, and help safeguard the integrity of the UK property market.

FAQs

1. Do estate agents really need to register with HMRC? 

Yes. Any UK‑based firm carrying out estate agency work (including dealing with overseas property for UK customers) must register with HMRC for AML supervision. Letting agents must also register if they handle rent or deposits above €10,000 per month.

2. What does AML compliance involve? 

Agents must conduct risk‑based CDD, maintain written policies and procedures, train staff, and appoint an MLRO. They should assess each client and transaction to decide whether simplified, standard, or enhanced due diligence applies.

3. Why were so many fines issued? 

HMRC emphasises that most penalties were for administrative failings—businesses had not registered or renewed on time. Compliance is not optional; ignorance of the rules is no defence.

4. How often should we review our risk assessment? 

HMRC guidance says estate agency businesses must keep their risk assessment up-to-date and modify it when services, client base, or operating model changes.

5. What are the penalties? 

Fines vary widely. Past HMRC penalty lists show amounts from a few thousand pounds to more than £50,000. Recent data shows an average fine of around £6,200 for estate and letting agents.

6. How can we avoid fines? 

Register on time, maintain accurate records, conduct CDD and sanctions checks, train staff regularly, and seek professional advice. Use a reputable AML tool or reminder service to track renewal dates.

HMRC Selects Cloud SAP to Modernise its Core Tax Platform

Posted on by Waheed Ahmed

HMRC selects cloud SAP to rebuild the technology that underpins the UK’s tax administration. The existing Enterprise Tax Management Platform (ETMP) runs on SAP ECC 6.0, software released in 2006. This aging platform supports more than 45 tax regimes and handles over £800 billion in tax revenue each year. With mainstream support for ECC ending in 2027 and extended support finishing in 2030, HMRC launched a regeneration programme to modernise the system

Migrating HMRC to a Cloud Platform—Why Now?

Tens of thousands of staff access HMRC’s ETMP daily to administer taxes, including income tax and VAT. The department’s accounting officer, Sir Jim Harra, explained that the programme has two non-negotiable requirements: the replacement must be software-as-a-service (SaaS) and hosted in the UK. After taking technical and legal advice, HMRC concluded that migrating to SAP S/4HANA—the successor to ECC—was the only option that met those requirements. In a direct award with negotiation, SAP was chosen by HMRC.

What the HMRC SAP Contract Covers

According to the UK contracts portal, HMRC signed the Enterprise Tax Management Platform (ETMP) Regeneration Software contract on 19 December 2025. SAP UK Ltd has been awarded the agreement, valued at £275,366,367 over a ten-year term ending 31 December 2035, through a “Direct Award with Negotiation” procedure. The new platform will migrate HMRC’s ETMP from ECC 6.0 to S/4HANA and deliver the service as part of RISE with SAP, a subscription offering that bundles cloud hosting, software, and managed services.

Key elements of the deal

  • Cloud migration: HMRC will move ETMP to the UK sovereign cloud offered by SAP, ensuring data remains within UK jurisdiction.
  • SAP S/4HANA Cloud: The department will adopt SAP’s flagship ERP suite, built on the in‑memory HANA database, which should offer real‑time analytics and faster reporting.
  • Business Technology Platform & AI: SAP’s Business Technology Platform and AI capabilities are included to support automation, machine learning and new digital services.
  • Direct award due to sovereignty requirements: The procurement notice states that only SAP could meet HMRC’s twin requirements of SaaS delivery and UK hosting. After engaging with potential suppliers, Sir Jim Harra noted that HMRC identified SAP as the only organisation able to comply.

HMRC plans to complete the migration by 2029. Two separate procurements complement the software contract:

  • A systems integrator (SI) contract to plan and deliver the migration from ECC 6.0 to S/4HANA.
  • Additional tenders for a customer relationship management (CRM) system (estimated value up to £1 billion) and a contact‑centre‑as‑a‑service solution (estimated value around £500 million). These systems will interoperate with the new ETMP but are separate procurements.

Expected Benefits of HMRC Selecting Cloud SAP

HMRC’s accounting officer assessment outlines several benefits of moving to S/4HANA:

  • Improved performance and analytics – early testing suggests that users can complete tasks faster and generate reports in real time.
  • Modern user interface – the new interface is expected to improve staff productivity and compliance by offering a cleaner, more accessible design.
  • Low/no‑code application development—HMRC will be able to develop custom apps more quickly, potentially cutting development time by half.
  • Native cloud hosting and cost savings—subscription pricing aligned to usage and reduced infrastructure costs—could save around £7 million per year once ECC 6.0 is decommissioned.
  • Resilience and security—hosting on a UK sovereign cloud and using a supported product reduces the risk of system outages that could disrupt tax collection.
  • AI and automation—SAP and HMRC plan to develop new artificial intelligence capabilities to improve taxpayer experiences and automate processes.

What are the implications for businesses and taxpayers? 

For most taxpayers, the change will be invisible at first. Over time, HMRC intends to use the new platform to deliver faster processing, improved digital services, and more consistent communications. Businesses should ensure their accounting systems are aligned with Making Tax Digital (MTD) and can integrate with HMRC’s evolving digital services. Keeping digital records and ensuring timely submissions will become even more important as HMRC leverages real-time analytics.

As accounting professionals, we expect HMRC’s transformation to lead to:

  • More automation of compliance checks, which may increase the importance of accurate record‑keeping.
  • Faster refunds and payment processing are real‑time data reduces manual interventions.
  • Greater scrutiny is driven by AI‑powered analytics, meaning errors or non‑compliance may be detected sooner.
  • Opportunities for businesses to adopt cloud-based solutions, aligning their finance processes with HMRC’s new digital infrastructure.

How We Can Help

Apex Accountants help clients navigate the changing tax landscape. Our services include:

  • Digital accounting solutions: We implement cloud‑based bookkeeping and accounting systems that integrate with HMRC’s digital services and support MTD.
  • Tax planning and compliance: Whether you’re a sole trader or a large corporation, we provide tailored advice to ensure timely and accurate submissions.
  • Training on Making Tax Digital: Our workshops and one-to-one sessions help businesses understand their obligations and use compatible software.
  • Business advisory: We advise on cash‑flow management, cloud migration strategies, and process automation so that your finance function keeps pace with HMRC’s digital transformation.
  • Support during system transitions: As HMRC rolls out the S/4HANA‑based platform, we will keep clients informed about changes to forms, submission processes, and deadlines.

Conclusion

HMRC’s decision to migrate its Enterprise Tax Management Platform to SAP S/4HANA via RISE with SAP is a significant investment in the future of the UK tax system. The £275 million contract, awarded through a direct negotiation due to strict sovereignty and SaaS requirements, aims to ensure that HMRC can continue to collect and manage more than £800 billion of tax revenue efficiently. The new platform promises better performance, a modern user experience, and the foundation for AI-powered tax administration. While taxpayers may not notice immediate changes, businesses should prepare for a more digital, data-driven tax environment. As always, Apex Accountants are here to help you stay compliant and make the most of the opportunities presented by HMRC’s digital evolution.

FAQs 

1. What is the ETMP? 

The Enterprise Tax Management Platform is HMRC’s core system for processing returns, accounting, and payments across more than 45 tax regimes, and it handles over £800 billion in revenue each year.

2. Why migrate now? 

SAP will stop mainstream support for ECC 6.0 at the end of 2027. HMRC wants to avoid running critical systems on unsupported software and to take advantage of modern cloud capabilities.

3. How much is the contract worth? 

The ETMP regeneration software contract with SAP is worth £275.37 million over ten years.

4. Was there a competitive tender? 

HMRC’s accounting officer considered multiple suppliers but required a SaaS solution hosted in the UK. The procurement notice describes the award as a direct award with negotiation, meaning SAP was selected without a full open competition because it was the only supplier meeting those requirements.

5. When will the new system go live? 

HMRC expects the S/4HANA-based ETMP to be operational in 2029.

6. Will this change how I file taxes? 

The migration is primarily a back-end transformation. HMRC says it will enable more responsive digital services and real-time reporting, but existing filing obligations remain. Taxpayers should continue to comply with Making Tax Digital requirements and other reporting obligations.

7. How will AI be used? 

SAP and HMRC plan to develop AI tools to surface insights faster, automate manual processes, and enhance decision-making across tax administration. Examples could include improved fraud detection or personalized guidance for taxpayers.

What the UK Government Tax Position Means for Taxpayers and Businesses in 2026

Posted on by Nida Umair

As the UK economy adjusts to ongoing global challenges, tax policy remains a key area of focus. Chancellor Rachel Reeves recently stated that the UK is in a strong fiscal position, which may potentially alleviate the need for further tax hikes in the near future. This statement regarding the UK government tax position has generated significant attention, as businesses, individuals, and economists are eager to understand what this means for the UK’s economic recovery and future tax policy.

This article breaks down the current state of the UK’s tax landscape, explores what the government’s fiscal strategy means for taxpayers and businesses, and offers practical advice on how to navigate these changes.

The UK Economy in 2026: Fiscal Strength and Stability

In January 2026, Chancellor Rachel Reeves gave a much-anticipated update on the UK’s fiscal position at the World Economic Forum in Davos. Reeves expressed confidence that the UK is now in a “strong position” to manage its financial affairs without needing to introduce further tax increases. This follows the substantial tax hikes already enacted to shore up public finances.

The UK government’s strategy has been focused on ensuring fiscal stability, balancing public spending with efforts to manage inflation, reducing the national debt, and fostering economic growth. After years of increasing tax burdens, Reeves indicated that the government’s fiscal policy has built up the necessary resilience to avoid adding extra financial pressure on individuals and businesses for the foreseeable future.

Major Tax Changes in Recent Years

Recently, the UK government has made significant changes to its tax system, focusing on raising revenue to address the aftermath of the COVID-19 pandemic and its associated costs. The tax burden has reached its highest level in decades, with several changes that have affected both businesses and individuals.

Key Tax Measures Introduced in the Last Few Years:

Income Tax and National Insurance Increases: 

The government has implemented tax rate increases, along with the freezing of tax thresholds, which effectively raises taxes without changing rates. These measures have increased the tax burden for many individuals and businesses, particularly those in higher income brackets.

Corporation Tax: 

One of the most notable changes is the corporation tax increase, which saw the standard rate increase from 19% to 25% for larger businesses, effective from April 2023. Although the change has affected companies across the UK, smaller businesses still face a lower tax rate.

Freezing of Tax Thresholds: 

The government has frozen key tax thresholds, including those for Income Tax, Capital Gains Tax (CGT), and Inheritance Tax (IHT). Increased inflation pushes more individuals and businesses into higher tax bands, despite their incomes not significantly rising.

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VAT and Business Rates: 

In addition to income-related taxes, businesses have faced increased VAT compliance requirements and business rate hikes. This has been particularly challenging for sectors such as retail, hospitality, and manufacturing, where rising costs are already a significant concern.

These measures, while aimed at stabilising the UK’s finances, have placed additional financial strain on businesses and individuals. However, they have also contributed to the financial buffer that Chancellor Reeves has mentioned.

The Government’s Strategy for Economic Growth

Chancellor Reeves’ comments about the UK being in a “strong position” are grounded in several key economic strategies that the government has pursued:

1. Fiscal Resilience: 

The UK government has focused on building fiscal resilience by strengthening public finances and preparing for potential economic shocks. Reeves suggests that this resilience may eliminate the need for tax increases for the time being.

2. Debt Reduction and Public Spending:

 One of the government’s primary objectives has been to bring the national debt under control. By increasing taxes and reducing certain forms of public spending, the government has managed to stabilise its finances and prevent further borrowings.

3. Encouraging Investment and Innovation: 

Despite the tax increases, the government has introduced several initiatives aimed at boosting economic growth. These include tax reliefs for research and development (R&D), support for green energy investments, and incentives for tech start-ups.

Challenges for the UK Economy and What It Means for UK Tax Policy

While the government is optimistic about the UK’s economic recovery, challenges remain. The UK faces several risks that could affect future tax policy, including:

  • Inflation: Rising inflation continues to erode the purchasing power of households and businesses, increasing pressure on public services and social benefits.
  • Labour Market Concerns: With tight labour market conditions and a growing skills gap, the UK faces challenges in boosting productivity and meeting workforce demand.
  • Global Economic Uncertainty: Global economic shifts, such as trade disruptions, energy crises, and geopolitical instability, could affect the UK’s economic stability.

The unfolding of these challenges raises the possibility of additional tax increases. However, for now, the government seems committed to maintaining the current trajectory and avoiding further immediate hikes.

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What Does the UK Government Tax Position Mean for Businesses and Taxpayers?

With the UK government signalling that tax rises are unlikely for now, businesses and taxpayers have a bit more certainty in their financial planning. However, businesses, particularly those in sectors hit hardest by the pandemic are still grappling with the impact of existing UK tax policies.

Here’s what businesses and individuals need to consider:

Businesses:

  • Continue to prepare for higher corporation tax rates and business rate increases. Many business models have already accounted for these changes, but ongoing costs may still pose challenges.
  • Take advantage of tax reliefs available, such as R&D credits, green energy incentives, and regional tax benefits.
  • Work closely with accounting advisors to navigate the complexities of tax compliance and ensure they’re capitalising on available deductions.

Individuals:

  • With the freezing of tax bands and rising inflation, many individuals are facing higher effective tax rates. Taxpayers need to plan ahead to manage their tax liabilities.
  • Take advantage of personal tax reliefs where possible, such as pension contributions or charitable giving.
  • Stay informed about changes to inheritance tax rules, particularly with regard to frozen allowances.

How Apex Accountants Can Help

At Apex Accountants, we offer expert guidance to help businesses and individuals navigate the complex UK tax system, ensure compliance, and maximise savings. Our services include:

  • Tax Planning & Strategy: We help individuals and businesses develop tailored tax strategies to reduce liabilities and optimise tax-efficient investments.
  • Business Advisory: Our team provides forecasting, budgeting, and advice on tax relief, such as R&D credits, capital allowances, and VAT optimisation.
  • HMRC Compliance: We manage all compliance-related issues, including tax filings, VAT returns, and payroll services, to ensure your business meets regulatory requirements.
  • Sector-Specific Expertise: Whether you’re in retail, hospitality, or tech, we offer bespoke services that address industry-specific challenges and opportunities.

Conclusion

As the UK continues to recover from economic disruption, the UK’s fiscal position provides reassurance to businesses and individuals alike. Chancellor Reeves’ remarks suggest that the immediate future will not see further tax rises, but it’s important to stay proactive with tax planning and financial forecasting. At Apex Accountants, we help you stay ahead of the curve by providing the expert advice you need to optimise your financial future.

Contact us today to learn how we can help you navigate the changing tax landscape and make the most of the opportunities ahead.

All You Need to Know About Companies House Late Account Filing Penalties for Private, Public Companies and LLPs

Posted on by Muhammad Asif

Companies House late filing penalties remain a significant concern for private companies, public companies, and LLPs across the UK. Missing annual accounts deadlines can result in fines, interest charges, and even involvement of debt collection agencies, creating pressure on cash flow and day-to-day operations. Many businesses only focus on compliance when deadlines are imminent or penalties have already been imposed, often leading to rushed filings and errors. By tracking deadlines, maintaining accurate records, and preparing accounts in advance, companies can reduce risk, maintain accountability to investors, and continue operations smoothly. Integrating filing processes into routine financial management allows companies to stay compliant while focusing on growth and long-term strategy.

Companies House Late Filing Penalties

Companies House late filing penalties apply to all UK-registered private companies, public companies, and LLPs. The size of the company and the lateness of its accounts determine the penalties. For private companies, fines start at £150 for accounts up to one month late, rising to £1,500 for delays over six months. Public companies face higher penalties, starting at £750 and reaching £7,500 for delays beyond six months.

Key compliance points include:

  • Filing accounts by statutory deadlines for private and public companies, and LLPs
  • Understanding how late filing penalties are calculated
  • Knowing the appeals process if a penalty is disputed
  • Maintaining accurate records to support filings

Following annual accounts filing rules for LLPs and companies helps reduce the risk of unexpected penalties and simplifies any audit or review process.

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Impact of Late Account Filing Penalties on Businesses

Late account filing penalties in the UK affect both small and large businesses. LLPs are treated similarly to private companies, and public companies face stricter fines. Non compliance can also impact investor confidence and trigger additional scrutiny from regulatory authorities.

Good practices include:

  • Monitoring filing deadlines using accounting software or reminders
  • Preparing accounts in advance rather than at the last minute
  • Keeping detailed financial records for verification

Maintaining compliance with late account filing penalties in the UK prevents disruptions and protects business credibility.

Case Study: Reducing Late Filing Penalties 

A medium-sized UK LLP managing multiple contracts fell behind on filing annual accounts due to delayed financial statements. The company faced late filing penalties and growing concern from investors.

Our team aligned with them and took the following key actions:

  • Reviewed overdue accounts and identified missing entries
  • Implemented clear bookkeeping and record-keeping processes
  • Created a filing schedule aligned with statutory deadlines

Within three months, the LLP submitted accurate accounts, penalties were reduced after appeal, and ongoing processes prevented future late filings.

How Apex Accountants Can Help

Apex Accountants provides specialist guidance for businesses managing Companies House filing obligations. We focus on creating practical, structured approaches that prevent late filing penalties while strengthening overall financial governance.

We can help with:

  • Preparing and submitting annual accounts accurately and on time for private and public companies, and LLPs
  • Complete guidance on annual accounts filing rules for LLPs
  • Advising on late filing penalties and the appeal process to minimise financial impact
  • Establishing bookkeeping systems aligned to statutory requirements
  • Implementing reminders and reporting structures to avoid missed deadlines
  • Providing strategic advice to directors on compliance planning and operational efficiency
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With our support, companies gain more than compliance; they gain a partner who understands the regulatory environment and guides businesses to avoid unnecessary penalties while maintaining operational efficiency. This approach allows directors to focus on growth, reduce administrative stress, and protect the company’s reputation with regulators, investors, and stakeholders.

Business Rates Hikes and Their Impact on UK Hotels and Accommodation Providers

Posted on by Nida Umair

The recent increase in business rates has placed a heavy financial burden on the UK’s hospitality sector, particularly on hotels and holiday parks. As part of the British government’s latest budget decisions, accommodation providers face significant challenges with sharp increases in their rates bills. More than 130 prominent hospitality businesses, including giants such as Butlin’s, Hilton, and Travelodge, have voiced concerns about the rise and its potential consequences.

Rising Business Rates in UK and Their Effect on Accommodation Providers

In the November 2025 budget, Chancellor Rachel Reeves announced changes to the business rates system that will directly affect hotels, resorts, and holiday parks across the UK. These changes include a phased reduction in the 40% discount currently offered to the hospitality sector, which will expire in April 2026. While the Treasury has introduced a transition relief measure, the long-term impact remains significant. The rising business rates in the UK have put additional pressure on accommodation providers, amplifying the financial challenges faced by the hospitality industry.

Hotels, which are already grappling with increased build costs and regulatory challenges, are now facing a 115% hike in business rates. The average hotel’s rates bill is expected to soar by an estimated £205,000 over the next three years. This sharp increase is putting immense strain on hotel operators, who warn that it will exacerbate the ongoing cost-of-living crisis.

How Business Rates Impact the Hospitality Sector

Business rates are a form of tax based on the value of commercial property, which in this case includes hotels, resorts, and other accommodation providers. These rates are used to fund local services and infrastructure but have been rising steadily due to several factors, including property valuations and governmental budget decisions.

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Immediate Impact: 

Hotels are expected to see their business rates increase by 115% over the next three years. This surge is primarily due to new property valuations for 2026, which will result in higher rates for hospitality businesses.

Rising Operational Costs: 

The increase in business rates comes at a time when many hospitality businesses are already dealing with rising construction and operational costs, including higher wages and material prices.

Employment and Investment Pressure: 

Many accommodation providers are being forced to reconsider their investment and employment strategies. With a heavier tax burden, some hotels may have to scale back their operations, affecting jobs and potentially leading to fewer investments in future expansions.

Potential Solutions and Sector-Specific Challenges

Several leading industry groups, including UKHospitality, have called on the government to extend its support to the entire hospitality sector, not just limited to pubs. The coalition of businesses stresses that the accommodation industry faces unique challenges and requires targeted assistance to navigate the financial strains of rising business rates.

Challenges

Pubs vs. Accommodation: 

While pubs have received additional support, accommodation providers argue that they too need measures to reduce their tax burden. The threat of passing costs onto consumers could worsen the already high levels of inflation and hurt the broader economy.

Hotel Development and Tourism Taxes

The rising costs of hotel development, alongside concerns about new tourism taxes, are also contributing to the uncertainty surrounding the future of the hospitality industry in the UK.

What Needs to Change?

Industry leaders are calling for an all-encompassing support measure from the government to address the financial strains of business rates hikes. While some transitional relief has been introduced, it is not enough to alleviate the pressure faced by hotels and other accommodation providers.

Expanded Support: 

The government must ensure that relief extends to all types of accommodation providers, not just pubs. Without comprehensive support, many businesses could face closure or be forced to raise prices, further impacting the cost-of-living crisis.

Sustainability of Hotel Development: 

As build costs rise, many businesses are reconsidering their plans for new developments. The UK needs to foster a stable environment for hotel investments, which includes tax relief and measures to offset rising business rates.

How We Help Hospitality Sector Amid Busiess Rates Hikes

At Apex Accountants, we understand the challenges faced by the hospitality sector, including the rising cost of business rates. Our team of experts offers tailored solutions for hotels, resorts, and other accommodation providers. Whether you are dealing with business rates hikes, tax planning, or operational financial management, we are here to help you navigate these turbulent times.

  • Tax Advisory: Our experts provide bespoke tax advice to help businesses reduce their tax liabilities and optimise their financial position.
  • Financial Planning: We assist accommodation businesses with long-term financial planning to account for rising operational costs, including business rates.
  • Compliance and Reporting: We ensure that your business remains fully compliant with UK tax regulations, including new business rates assessments and VAT compliance.
  • Support for Financial Decisions: Apex Accountants provides comprehensive support to help businesses make informed financial decisions that will enable them to thrive in a challenging economic environment.
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Conclusion

The increase in business rates for the UK hospitality sector represents a critical challenge for hotels and accommodation providers. How business rates impact the hospitality sector is significant, as these rates directly affect operational costs, investment decisions, and pricing strategies. With significant rate hikes expected over the next few years, many businesses face tough decisions regarding their future. The pressure of rising business rates is already making it harder for many to maintain profitability, leading to concerns about scaling operations and potential job losses.However, with the right financial planning and expert support, accommodation businesses can navigate these challenges and continue to thrive. At Apex Accountants, we are committed to helping you manage your financial obligations and ensuring your long-term success. Contact us today to learn more about how we can support your business through these difficult times.

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