Every week we take a look at what is trending in the accountancy and tax press and share items that we think will interest you. However, these are only outlines and where they relate to tax planning should not be acted upon without looking into them more completely as everyone’s circumstances are particular to them. You need to take specific advice appropriate to your own circumstances.
While every effort is made to deliver accurate, informative and balanced articles this content is general in nature and should not be used as the sole basis for making decisions.
MTD: The Year-End Process
Quarterly updates will contain unadjusted income and expenses from trading and property. At the year-end, we need to turn these unadjusted figures into accounts and work out the tax and make the MTD year-end submission.
It is still unclear what this final submission will be called, but a consensus seems to be forming around it being the “MTD Tax Return” to distinguish it from the current self-assessment return, which it replaces.
Like the self-assessment return, the MTD tax return will bring together all of the information necessary to calculate the tax payable for the year. The deadline will also be the same – 31 January after the end of the tax year.
However, the process itself will look quite different, comprising the following high-level steps:
Step 1: Trading and property adjustments
Making the necessary accounting and tax adjustments to the self-employment and property income and expenses previously reported in the quarterly updates. The results from the fourth quarterly update for each trade/property business will be drawn down from HMRC’s systems directly into the software, where they can be adjusted as needed.
Step 2: Bringing in other income and gains
Some of these will be drawn down from HMRC and pre-populated in software, including PAYE income, student loan repayments, pensions and benefits payments, CIS subcontractor deductions and gains on residential property. This information will need to be checked carefully and, if incorrect, updated. Other information which HMRC doesn’t hold, such as savings and dividend income or other capital gains, will need to be entered into the software manually.
Steps 3 and 4: The tax calculation
Once all income and gains have been correctly reflected in your software, this information has to be sent to HMRC to trigger a tax calculation. That calculation will then be drawn down from HMRC and displayed in your software for review.
No formal declaration is required at this stage regarding accuracy and completeness.
It is also possible to request a tax calculation more than once before formally submitting the return.
If you believe HMRC’s calculation is incorrect, you will first need to check that the correct information has been included in your software. If you spot an error, you should correct it and resubmit the information to trigger a new tax calculation.
Step 5: Submitting the return
Once you are happy with the tax calculation and the return is approved, it can be formally submitted. There will be a ‘final declaration’ confirming that all the information is complete and correct to the best of your knowledge. The MTD tax return can then be filed.
HMRC Agent Registration
It is being proposed that Tax advisers who interact with HMRC on behalf of clients will be required to register from April 2026. Draft legislation on mandatory registration for tax advisers introduces some potentially very wide changes that could affect anyone providing tax services.
There would be a legal requirement for tax advisers who interact with HMRC on behalf of clients not only to register with them but also to meet certain minimum standards.
One question that has arisen is whether the administration burdens contained within the draft legislation are appropriate to meet the government’s objective. This is because registration is required by the firm, along with each senior manager of the tax adviser. These senior personnel, as part of their registration, must have no outstanding tax returns or payments due to HMRC, not be insolvent and not subject to certain sanctions, disqualifications or convictions.
Senior manager in the context of a company is broadly directors, shadow directors or those acting as directors. For a partnership/LLP, it means a partner/member, or anyone acting in that capacity.
If even one partner or director (regardless of whether they are involved in the delivery of tax services) fails to meet these criteria, the firm would be required to state, as part of its registration submission, that it does not satisfy all of the prescribed eligibility conditions.
It seems likely that more clarification will be issued in due course.
The other question will be whether it is feasible to have legislation in place and registrations complete in the currently proposed timescale.
Late Payment of Invoices
The government plans to effectively limit payment terms between UK businesses to 60 days by introducing legislation to amend the Late Payment of Commercial Debts (Interest) Act 1998, removing the exemption that allows businesses to agree to payment terms longer than 60 days if considered not ‘grossly unfair’.
This proposal is now out for consultation, and the government has set out its long term plan to stamp out bad payment practices.
Currently, late payment is only controlled in a voluntary way through the Fair Payment Code, which sets a recommended 30-day payment period for SME invoices owed by large businesses.
The late payment consultation closes for comment on 23 October 2025.
Uber VAT
Uber’s argument concerned the correct interpretation of the Local Government (Miscellaneous Provisions) Act 1976, which regulates the provision of private hire vehicles outside of London.
Now, the Supreme Court has thrown out the appeal, rejecting Uber’s argument. Other taxi companies outside of London are happy with this result.
Uber Britannia Ltd (UBL) claimed that private hire taxis should have to enter individual contracts with every passenger, increasing the fees for users of taxis across the country when they were booked in advance.
The Supreme Court ruled that private hire companies should not be forced to change their business models and therefore increase the costs of their services.
Had the decision gone the other way, the cost and complexity of implementing VAT systems could have pushed many firms to the brink. This ruling ensures that operators can continue to operate under established, regulated models that have been in existence since regulation was introduced almost half a century ago.
Had Uber’s appeal succeeded, it could have forced thousands of small firms into having to charge and account for VAT on journeys. Firms using the traditional agency model or acting as intermediaries can continue and not be treated as providing the hire service themselves, which would otherwise trigger the VAT liability. If Uber had won its appeal, a 20% increase in taxi fares could be coming for the rest of the UK, as is already charged in the capital. Uber wanted to see this VAT charge enforced on every privately hired vehicle outside of London.
Companies – Marginal Relief Errors
HMRC is writing to companies that may have failed to include the correct number of associated companies in their corporation tax return and, as a result, claimed marginal relief in error.
On 1 April 2023, the main rate of corporation tax increased to 25% and a small profits rate of corporation tax of 19% was introduced for companies with profits of up to £50,000. However, marginal relief may be claimed where the company’s profits are between £50,000 and £250,000, giving an effective overall rate of corporation tax rate of between 19% and 25%.
The lower and upper thresholds of £50,000 and £250,000 are reduced proportionately where the company has associated companies. For example, where there is one associated company, the thresholds are reduced to £25,000 and £125,000.
A company is associated with another where one controls the other, or both are under common control. These rules can be difficult to apply in some circumstances.
In the letter, HMRC asks the company to check the position and take one of various actions within 30 days from the date of the letter, depending on its own circumstances.
Connected Companies for Employment Allowance
Where two or more companies are connected, only one can claim the employment allowance, but determining if companies are connected can be complicated. An employer can benefit by up to £10,500 for 2025/26 by claiming the national insurance (NI) employment allowance. Restrictions apply, including where companies are connected, for example, as part of a group.
Where a company is connected with another company or companies at the start of the tax year, only one of the companies can claim the employment allowance for that tax year. It is up to the companies to decide which company makes a claim.
A company is connected with another company where one controls the other or where both are under the control of a third party.
Control can be exercised in a number of ways, including by owning a majority (50%+) of the shares in the company. This includes interests held by the person’s associates, depending on the circumstances. The definition of “associate” is quite broad and, for an individual, includes the person’s spouse/civil partner and their relatives (eg, parents and grandparents, children, brothers/sisters), amongst others.
Rights held by associates are relevant when considering if two companies that are “substantially commercially interdependent” are connected companies. This is a subjective test, taking into account the extent of any financial, economic and organisational ties.
Where two companies are not substantially commercially interdependent, there is no need to bring in the rights of associates when determining if a person controls a company.
Special tests also apply to determine whether companies are connected where there are fixed-rate preference shares, loan creditors, or rights held in trust.
A company that is incorporated after 6 April in a tax year can claim the employment allowance for that tax year. This is the case even where the company is a newly formed subsidiary of another company. The company will need to consider if it has any connected companies at the start of the next tax year.
Verifying Your Identity for Companies House
Identity verification is a new legal requirement.
You’ll need to verify your identity if you are:
- a director
- the equivalent of a director – this includes members, general partners and managing officers
- a person with significant control (PSC)
- an Authorised Corporate Service Provider (ACSP) – also known as a Companies House authorised agent
- someone who files for a company – for example, a company secretary
In most cases, you’ll only need to verify your identity once.
You can only verify your identity for Companies House using the following options.
- Using the ‘Verify your identity for Companies House’ service
- Using an Authorised Corporate Service Provider (ACSP) – That’s us!
When you have successfully verified, you’ll get a unique identifier known as a Companies House personal code. The code is personal to you, not your company or a company you work for.
From 18 November 2025, you’ll need it for various reasons. For example:
- when you file your confirmation statement
- if you are appointed as a director
- if you become a person with significant control (PSC)
If you are currently a director or a PSC, you’ll need to use your Companies House personal code to connect your verified identity to the Companies House records. This is a legal requirement, and will ensure that they know the correct identity is linked to any roles you hold.
You may need to share this code with people you trust to file on your behalf or for your company.
If you’re a director or PSC, you’ll need to use your Companies House personal code to connect your verified identity to the Companies House records for each role you hold.
You’ll need to provide your personal code in your company’s next confirmation statement filing from 18 November 2025.
If you become a director after 18 November 2025, you’ll need to provide it as part of your appointment filing or when you incorporate a company.
If you are a PSC (Person with Significant Control), you’ll need to provide your personal code to Companies House for your role as a PSC. There will be an online service to do this when the requirement comes into force on 18 November 2025.
Questions?
If you have any questions about any of these, you know where to find us. If you prefer, just give me a ring on 07770 738770 or email me at alan.long@thelongpartnership.co.uk.
