23rd October 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Small manufacturers can apply for electricity-cost relief
Small businesses can now benefit from a new electricity-cost relief scheme that was launched on 1 October. Applications close on 30 November 2026.

The British Industrial Competitiveness Scheme (BICS) is open and more than 10,000 businesses across Britain are thought to be eligible. BICS will cut manufacturers’ electricity costs by up to 25%, with support targeted at the UK’s frontier and foundational industries where around 98% of all firms are small businesses. The percentage received will vary with the price a business pays.

Businesses confirmed as eligible will also be in line for an additional lump-sum payment equivalent to around a year’s relief from the scheme. Only those applying for BICS this year will be able to access the additional year of payment.

There is also extended support through the British Industry Supercharger, announced in October last year. This increased the discount on electricity network charges for businesses in sectors like steel, cement, glass, and chemicals, from 60% to 90% and is expected to be worth over £400 million. 

For BICS, businesses must fulfil four tests:

• Be in an eligible business sector
• Have a Companies House registration
• Have an eligible manufactured product
• Have sufficient electricity use

The government guidance outlines that sector eligibility uses the Standard Industrial Classification (SIC) codes and products use Harmonised System (HS) codes. Manufacturing sites are required to use a minimum of 33 megawatt-hours of annual grid electricity.

Companies must supply the full required details to be eligible, but even a favourable check should not be treated as approval.

There is an official evidence checklist to help businesses organise their application. Businesses can submit their applications on gov.uk here: https://apply-for-bics.service.gov.uk/

Further information and guidance on applying for support from BICS is available on the scheme’s gov.uk pages here: https://www.gov.uk/government/publications/british-industrial-competitiveness-scheme-business-guidance/british-industrial-competitiveness-scheme-guidance-for-applicants
 
Implications for authorising tax agents
Tax agents and accountants have generally become integral for businesses of all sizes. But what can the agent do for a business and what should business owners expect?

There are different ways of giving your agent authority over your tax affairs, depending on which tax services are used.

But one thing that company owners should be aware of is that the legal buck usually stops with them.

A taxpayer may appeal a penalty for late filing, late payment, error or mistake, so long as they have grounds to appeal, known legally as a reasonable excuse. For nearly all taxes, except VAT, it is reasonable to rely on the work of an accountant or a tax adviser, provided that the taxpayer takes precautions to check that the adviser is qualified and is performing the tasks with due care and keeping within filing deadlines.

But the devil is in the detail, with successful appeals relying on the tax issues being complex and needing an agent and the taxpayer actively monitoring the agent's work. Executives must check the agent’s information and let them know it’s correct before they submit it to HMRC. Remember too that an agent will hold critical financial information.

What an authorised agent can do on your behalf
Construction Industry Scheme: when authorised, agents can access your returns, subcontractors’ income and deductions.

Corporation Tax: when authorised, agents will gain access to your company and financial information and be able to update the company communication and contact details

Making Tax Digital for Income Tax: when authorised, agents can sign taxpayers up for Making Tax Digital for Income Tax, create, store and correct digital records of your self-employment and property income and expenses. They can send your quarterly updates to HMRC and submit your tax return.

Self Assessment: when authorised, your agent can submit tax returns and claim tax relief, holding your full personal details including personal national insurance numbers and the unique taxpayer reference. They have the power to discuss your current and previous tax returns with HMRC and view and change your details, such as sources of income. This includes providing bank details to HMRC when repayment is due, viewing and submitting your updates (income and expenses) and finalising your overall tax position.

They can also cancel a taxpayers Self Assessment registration.

In this case, before authorising an agent, the taxpayer must first register for Self Assessment. Once done, taxpayers can use the ‘64-8 Authorising your agent’ form to mandate an agent.

Tax credits: when authorised, your agent will gain access to your personal and financial information relating to your tax credit claim. They can act on your behalf but cannot receive payments. Correspondence will still be sent to you.

VAT: an authorised agent can (in writing or by telephone only) discuss your VAT with HMRC and sign paper documents on the taxpayer’s behalf. This includes viewing, changing and submitting your VAT details, payments and liabilities.

They can also cancel your VAT registration and appeal a late submission or late payment penalty.

Issues with online agent authorisation
Taxpayers can authorise an agent for a specific tax year using an online service or the business tax account. If there are problems with an online service, taxpayers can use the ‘64-8 authorising your agent’ form. It’s important that the information is clearly presented and that the correct agent codes for the relevant tax regimes are provided. HMRC recommend not including a covering letter unless it contains essential information necessary to process the form.

Writing anything on the form outside the boxes is forbidden and taxpayers should not provide any additional information in the form fields other than the requested information.

Compliance checks and agents
It’s not unusual for HMRC to issue compliance checks to ensure the correct amount of tax is paid for specific areas. Frequently, businesses will only employ an agent when compliance issues arise. In this case, taxpayers should use the ‘Disclosures: temporary authorisation to allow HMRC to deal with your tax adviser’ (COMP1a).

This is a temporary authorisation and will not cancel or amend any permanent authorisation that you have already sent to HMRC, for example, any authorisation through HMRC’s Online Service or form 64-8. This form gives your written consent for HMRC to exchange and disclose information relevant to the disclosure with the adviser named. It relates only to the disclosure of the year(s)/period(s) that you enter on this form.  

Giving agents limited authorisation
If you want to authorise an agent to deal with a specific area of your tax, but not act as a full tax agent on all records, this is called limited authorisation. An agent with limited authorisation can talk to HMRC and answer any questions on your behalf and help you to fill in forms. They will not have access to your tax online.

To give an agent limited authorisation to help deal with your tax, write to HMRC.

Form 64-8 Authorising your agent at https://assets.publishing.service.gov.uk/media/6852e9f02b367fdd44c15e8a/64-8.pdf ‘Disclosures: temporary authorisation to allow HMRC to deal with your tax adviser’ (COMP1a) at https://www.tax.service.gov.uk/print-and-post/form/Compliance/1.0/COMP1a/comp1a.xdp

If you need help with any of this or are looking for support on a compliance issue, please contact us.
 
Major business consequences of Deposit Return Scheme
Manufacturers, importers, wholesalers and retailers are being warned that significant regulatory change is coming under the Deposit Return Scheme (DRS).

Due to launch across the UK in October 2027, it will fundamentally change how drink containers are sold, labelled, collected and recycled and create significant new obligations for businesses. Its primary objective is to improve environmental sustainability.

Under the DRS, consumers will pay a refundable deposit on eligible drink containers at the point of purchase and reclaim that deposit when the empty container is returned to a designated collection point. The scheme will apply to single-use PET plastic bottles and metal cans between 150ml and three litres. Exchange for Change, the industry-led

Deposit Management Organisation (DMO), has confirmed that the deposit will be set at a flat 20p per container.
Some bottles will be excluded, such as plastics used in milk containers and medicine bottles.

Producers and importers
For drinks producers and importers, compliance will extend far beyond simply adding a deposit charge. They will have to register with Exchange for Change, report the volume of in-scope containers placed on the market, ensure products carry compliant DRS labelling and markings and contribute producer fees to fund the scheme's operation.

Retailers
Retailers will also face new responsibilities, including charging deposits at the point of sale, operating return points unless exempt and refunding deposits to consumers. The changes could have serious implications for a business’s invoicing, VAT, packaging, pricing and even logistics processes. Both government and industry groups are recommending that preparations should begin now to avoid operational disruption.

Commercial impacts
The new flat-rate deposit system means large volumes of cash will flow through businesses before being redeemed by consumers. This creates new cash flow considerations, particularly for retailers and wholesalers. Additionally, businesses will need systems capable of accurately tracking deposits, returns and reimbursements while ensuring compliance with reporting requirements.

For companies operating across multiple UK jurisdictions, there are other complexities. Wales is developing a separate DRS that will include glass bottles, unlike England, Scotland and Northern Ireland. Although deposits will not be applied to Welsh glass containers until 2031, businesses will have to face different labelling, reporting and operational requirements for the same product range.

The European question
International businesses must also monitor developments in Europe. The EU Packaging and Packaging Waste Regulation (PPWR) requires Member States to establish deposit return systems for single-use plastic beverage bottles and metal cans by 1 January 2029, with a target of achieving 90% separate collection rates. As a result, UK exporters may find themselves managing multiple DRS compliance regimes simultaneously, increasing administrative complexity and regulatory risk.

With less than a year before detailed implementation activity accelerates, businesses should already be assessing product portfolios, reviewing contracts, updating IT systems and planning packaging changes. For the drinks industry, the DRS is no longer a future policy discussion. It is an imminent commercial reality that requires preparation today.

If you have accounting concerns about the introduction of the DRS, please get in contact. We’re here to help.
 
Director fraud could be greater than previously thought
New data suggest that as many as 33,675 companies could have fraudulent directors who are unable to prove their identity.

There has long been concern that the governance of Companies House data was inadequate and allowed widespread financial crime and money laundering. In part to tackle these problems, Companies House has overhauled its registration process. Since November 2025, valid photo ID such as a passport or driving licence have been required to verify their identities.

An analysis of Companies House filings by enterprise software group Shareflo suggests the scale of director fraud in the UK may be materially greater than previously understood. It found that since the new identity-verification requirements came in there has been a rise in the number of companies going over one month overdue with their annual filings. It identified 33,675 such companies.

Looking at more than three million active, non-dormant private companies, Shareflo found that overdue confirmation statements rose sharply in the first year of the regime, particularly for companies between one and twelve months late.

Using historical data and accepting that short delays were often administrative mistakes, the number of companies one to twelve months late rose by 138.5% in a year. The pattern is especially striking because the increase is concentrated in the period where identity verification should be binding.

The companies in the unresolved group are disproportionately concentrated in sectors including accommodation and food services, transport and storage, wholesale and retail, and construction - sectors where fraud tends to be most common.

You can find the full report here: https://www.shareflo.co.uk/research/uk-director-fraud?downloaded=1#download

If you need help with Companies House or have concerns over suppliers, please get in contact. We’re here to help.
 
Value of R&D relief up, number of claims down
New research on companies claiming Research and Development (R&D) tax credits shows the value of tax relief support was £8.2 billion, an increase of 5%, while the number of R&D tax credit claims decreased by 17% for 2024-25.
The 2026 Research and Development (R&D) publication, produced by HMRC, examines the number of companies claiming R&D tax credits and the associated cost to the Exchequer.

For tax purposes, R&D is defined as a project that seeks to achieve an advance in science or technology and directly contributes to achieving this advance through the resolution of scientific or technological uncertainty. All expenditure claimed should be detailed.

This is the first publication to include statistics for the new merged R&D Expenditure Credit (Merged RDEC) and Enhanced R&D Intensive Support (ERIS) schemes, that were introduced for accounting periods beginning on or after 1 April 2024, replacing both previous R&D tax relief schemes.

The research estimated that the amount of tax relief claimed through the Small and Medium-sized Enterprise (SME) and ERIS schemes fell by 29% compared with the previous year, to £2.3 billion. This was largely due to a combination of SMEs claiming under the new Merged RDEC scheme, and the new rates of relief available under the SME scheme being available for a full year of expenditure.

The amount of relief claimed through the RDEC and Merged RDEC schemes increased by 29% to £5.9 billion as companies began claiming under the new schemes.

The number of R&D tax credit claims for the financial year 2024 to 2025 was estimated at 40,325, a decrease of 17% from the previous year driven by a decrease in SMEs claiming while large company claims increased by an estimated 4%.

The average claim value increased by 27% from 2024 to 2025. This contributed to an increase in the total value of R&D relief claimed, despite a reduction in the volume of claims. Consistent with patterns of previous years, a small proportion of claims (6%) accounted for 69% of the total value of claims.

Claimants were dominated by Information & Communication, Manufacturing, Professional and Scientific & Technical sectors, making up 75% of total claims and 71% of the total amount claimed.

To see the full report, go to: https://www.gov.uk/government/statistics/corporate-tax-research-and-development-tax-credit/research-and-development-tax-credits-statistics-september-2026

If you need help in planning an R&D project or want your figures reviewed, please get in contact. 
 
Upcoming changes to the Trader Support Service
For companies that trade with Northern Ireland or vice versa, the next phase of the Trader Support Service goes live on 20 October 2026.

The Trader Support Service is a free digital platform and contact centre provided by HMRC to help traders submit customs declarations for goods moving between Great Britain and Northern Ireland under the Windsor Framework. It supports businesses by auto-generating Goods Movement References and handling declarations on their behalf.

For businesses already signed up for the outgoing Trader Support Service, they will be automatically migrated to the new service but are expected to need to create a new password and ensure their details and permissions are up to date.

They will also receive instructions for accessing a test environment where they can familiarise themselves with how the platform works.

Changes have been made to the way goods move in and out of Northern Ireland and if companies have not already prepared for these changes, they may not be able to move goods.

To sign up to the service, go to https://www.tradersupportservice.co.uk/tss
Should you need help with the Trader Support Service, please get in contact with us. We’re here to help.
 
And in other news…
Rumours on Man City murky tax deals continue
Pressure on Manchester City football club has increased with the Financial Times revealing that HMRC launched a tax probe in 2018 examining whether complex arrangements led to an underpayment of tax.

The club has vehemently denied all allegations.

At the same time, the chairwoman of the Treasury Committee, Dame Meg Hillier MP, has written to JP Marks, Permanent Secretary of HMRC, about any tax implications of the Premier League’s investigation into the club.

Email leaks and stories in the German media prompted a Premier League investigation which found that the club had boosted its financial position by more than £900mn between 2009 and 2018 with fake commercial deals.

Dame Meg has called for HMRC to view an unredacted version of the Premier League’s investigation, which found City guilty of all but one of the 115 charges laid against it.

The issue creates problems for the UK government since the disguised funding is believed to come from the club’s owner Sheikh Mansour bin Zayed al-Nahyan, a member of Abu Dhabi’s ruling family. Abu Dhabi has committed £30 billion in investment commitments in the UK, primarily under Mubadala, its sovereign investment fund.

To add fuel to the fire, Khaldoon Al Mubarak, the chairman of Manchester City, is also group chief executive of Mubadala and has diplomatic immunity.

Billionaires ‘should I wait or should I go’?
New figures claim that the UK has lost super-rich UK residents worth a combined $160bn (£121bn) over the past two years.

The Bloomberg Billionaires Index says this shift since 2024 represents more than half of all billionaire wealth in the UK. The change is attributed to Rachel Reeves, the former chancellor, ending the centuries-old non-domicile tax exemptions in April last year. From 6 April 2025, the rules for non-UK domiciled individuals were replaced by a system based on tax residence, allowing wealthy individuals to pay UK tax only on income generated in this country.

The figures are controversial as the Office for National Statistics and the Office for Budget Responsibility are yet to come to any conclusions on the effects of Ms Reeves’ policies.

But figures extrapolated from the Sunday Times Rich List 2025 of the 350 individuals and families named in this year’s list show 24 now live in Monaco. 60 did not appear in this year’s rankings who were listed in 2024. Primarily, that was because they were non-British citizens who had moved overseas and non-UK citizens are removed from the list once they leave the country.

Should there be traction to the new analyses, it could have serious implications for the UK’s tax take. HMRC figures show that the top 1% of those paying Income Tax were liable for 28.5% of total Income Tax in 2022 to 2023. Of course, the question is, do the super-rich pay Income Tax?

Certainly, big names have left. Hedge fund tycoon Chris Rokos, worth £3 billion, moved to Greece having previously paid £330 million in taxes last year, making him Britain’s third-biggest taxpayer according to The Sunday Times. He was followed by brothers, David and Simon Reuben, worth £28 billion, who shared second place on this year’s Sunday Times Rich List.

Do you pay too much tax? Please get in contact; we’re here to help.

Making Tax Digital software still can’t provide full returns
Not all software applications for Making Tax Digital (MTD) can file a full tax return for landlord claims, according to software company LetCompliance. HMRC’s official list of 165 software products for MTD for Income Tax names 128 products that specifically are capable of handling landlords’ British property income. HMRC makes no recommendations.

Of those 128 software products, only 84 are currently capable of sending full returns. While every software application can handle the required quarterly updates, the fourth update finalising the tax year requires a return to be filed electronically, instead of the old online form.  Of the 84, only 11 are ready now for all 16 other income types and items HMRC lists, such as bank interest, dividends and pensions.

MTD for Income Tax was launched on 6 April 2026 for landlords and sole traders with qualifying income over £50,000. It extends to those with earnings above £30,000 from 6 April 2027. For the first year, 2026 to 2027, the tax return is due by 31 January 2028.

If you need help with MTD, please get in contact. We're here to help.

16th October 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

What the professional tax bodies suggest for Budget 2026
The UK’s professional tax and accounting bodies have made a number of suggestions to HM Treasury for the upcoming budget. Whether the invited representations will be taken on board by the Chancellor, John Healey, in his first budget on 28 October 2026, remains to be seen.

The Association of Taxation Technicians (ATT)
The ATT published six suggestions, including on Inheritance Tax (IHT) simplification, Making Tax Digital (MTD) penalties and HMRC-approved mileage rates.

Inheritance Tax
The ATT recommended a simplification of the IHT regime for a fairer system for those affected. It argued that the Nil Rate Band (NRB) and the Residence Nil Rate Band (RNRB) should be merged into one single enhanced NRB. As unused pensions come into scope for IHT from April 2027, the ATT felt this change would avoid more families having to 'grapple' with the complexities of the RNRB.

It said that pension property should be treated as a separate component of the estate when testing for the 36% reduced rate, to avoid discouraging gifting to charity on death. This would protect those who have already planned to make gifts under the existing rules and give more flexibility to those who want to make charitable gifts to reduce IHT on their pension assets only.

Employment and mileage rates
On employment, the ATT advocated further consultations on options to introduce a single common statutory framework for UK employment status. This would have a statutory underpinning similar to the Statutory Residence Test (SRT), clarifying the treatment for most arrangements while being consistent for tax and employment rights purposes. 

Once a framework is in place, the ATT recommended that the HMRC Check Employment Status for Tax (CEST) tool should be overhauled and replaced with a tool reflecting the new test. The government should also consider whether employment tribunal decisions should apply for tax purposes, and vice versa.

The ATT argued that mileage rates for cars, motorbikes and bicycles should be increased to reflect the current costs of running and maintaining a personal vehicle and be reviewed annually. It suggested a rate of at least 60p per mile for a car or van.

Party time
The tax exemption for annual parties and social functions should be increased, said the ATT, allowing employers to organise social events without incurring a tax liability. The exemption has remained at £150 per head (including VAT) since April 2003.

It should be increased to at least £280 per head (including VAT) to reflect higher costs and inflation. 

Likewise, the limit on trivial benefits should be increased, as it has not changed since April 2016. The £50 trivial benefits limit should be increased to £70. The £300 annual cap on benefits provided to directors and their households/families should increase to £425.

Relief should also apply where an employer reimburses an employee for a purchase that would have qualified had the employer paid for it directly, including where the employee reimbursed is not the recipient of the benefit.

Making Tax Digital
The existing late-filing penalty easement for MTD should be extended to the one million lower-income taxpayers who are joining the system for the first time in 2027-28. An extension to the soft landing for penalties would give these newcomers time to get to grips with the complexity of MTD without worrying about penalties. 

The Chartered Institute of Taxation (CIOT)
The CIOT made a single submission recommending six targeted legislative changes to the new IHT rules for pensions. It has concerns that time is running out to fix administrative hurdles that the new rules face before they take effect on 6 April 2027. 

Where pension funds are discovered after HMRC have issued a certificate of discharge, the CIOT wants the estate rate of tax to be paid by the pension beneficiaries and pension administrators should notify HMRC of such payments. This would avoid having to recalculate the tax on the rest of the estate. 

Loss relief should also be available for pension assets where the scheme administrator sells the assets within 12 months of death, and should any tax need to be paid, the IHT instalment payment provisions should be available.

It also wants the interaction between the charitable giving rules and the reduced rate of IHT to be reformed.

Once pension wealth is included in estates, some estates will no longer satisfy the 10% rule needed to obtain the reduced rate of 36%. Conversely, percentage-based legacies may produce larger charitable gifts than intended, at the expense of residuary beneficiaries.

The CIOT recommends a separate component for pension assets. It also considered the six-month payment deadline as unrealistic and unreasonable and recommended extending it to 12 months.

Family companies and IHT
The CIOT also wants families to be helped to fund IHT liabilities in family companies. The Agricultural Property Relief and Business Property Relief changes have brought more family companies into the scope of IHT, with assets often tied up in family companies. 

To avoid the sale of businesses to cover these liabilities, the undue hardship condition for a company purchase of its own shares should be removed. The current legislation only allows capital treatment on a company's purchase of its own shares used to fund IHT where the personal representatives would otherwise face undue hardship.

The Institution of Chartered Accountants in England & Wales (ICAEW)
The ICAEW representations were aimed at turning around the public finances, kickstarting growth and unlocking investment based on tax reform.

It wanted tax administration fixed by prioritising quality and modifying the tax dispute resolution system. This involves requiring HMRC to provide an accessible, reliable and effective service to taxpayers and agents. A recent report from the Administrative Burdens Advisory Board (ABAB) found that 31.4% of respondents remarked that their experience of dealing with HMRC had worsened in the past year.

Again, the issue of MTD for Income Tax arose for the ICAEW. Like the ATT, it wanted to extend the soft landing for penalties for each population of mandated taxpayers. It also wanted to delay the adoption of MTD for the £30,000 threshold until a full review of the initial rollout was done.

Growth suggestions
It called for taxes to be reformed to promote growth, including a radical reform of business rates to reduce costs for businesses. This includes moving towards a simplified VAT system with a wider base, fewer exemptions and a lower single rate. 

The ICAEW wants the tax 'cliff edges' to be fixed, as currently they discourage people from working more or growing their businesses. 

Again, it found the current employment status rules needed clarifying to help businesses comply with both tax and employment law. 
Other suggestions included ruling out further increases in employment taxes during this Parliament and targeted tax relief on pre-development costs to attract more infrastructure investment. An expansion of HMRC’s current advance tax certainty service to cover more projects would help.

It again warned government to be cautious about using Capital Gains Tax to raise revenue, as further changes could deter investment in businesses, particularly Small to Medium-sized Enterprises (SMEs).

Should you have concerns about MTD, IHT, tax reliefs or any tax issues, please contact us and we would be happy to advise you.
 
Avoiding late payments with an invoicing strategy
For Small to Medium-Sized Enterprises (SMEs), the issue of late payments can mean the difference between survival or liquidation.
The Department for Business & Trade estimates it costs the economy £11 billion annually, forcing 38 businesses to close their doors every day.

The government is taking steps to change this, with the Commercial Payments Bill having its first reading in the House of Lords in May 2026. It proposes a 60-day hard cap on business-to-business payment terms, new powers for the Small Business Commissioner to fine persistent late payers and a requirement for the boards of large businesses with poor payment records to publish an explanation of how they intend to improve.

But companies need to ensure they have robust procedures for collecting money owed on invoices, as cash flow is the blood of the business. There are steps to take.

For SMEs, the advice is remarkably consistent: make it easy to pay, make expectations clear and follow up systematically.

1. Agree payment terms before starting work
Set out payment terms in writing before work begins. This should include due dates, payment methods and what happens if invoices become overdue. Clear, documented terms reduce disputes and payment delays.

2. Invoice promptly
Invoice as soon as goods or services are delivered rather than waiting until month-end. The quicker the invoice is issued, the sooner the payment clock starts.

3. Make invoices accurate and easy to understand
Ensure that invoices clearly contain all required information, including purchase order numbers, contact details, payment instructions, due dates and a clear description of the work carried out.

4. Offer convenient payment options
Offer customers multiple ways to pay, such as bank transfer, card payment, online payment links or direct debit.
 
5. Check customer creditworthiness
Before taking on a new customer, conduct credit checks and basic due diligence. This includes previous bankruptcies or a string of liquidated companies. This helps avoid future bad debts.

6. Ask for deposits or staged payments
For larger projects, and certainly those that might strain the company’s resources, request a deposit upfront and agree on milestone payments. This reduces financial exposure.

7. Automate reminders and follow-up
Use accounting software to send automatic reminders before and after payment due dates. Many late payments are simply the result of oversight rather than unwillingness to pay. This involves a structured credit control process:

• Reminder before due date.
• Reminder on due date.
• Follow-up email or call after the due date.
• Escalation procedures for persistent non-payers.

9. Build strong customer relationships
Maintaining regular communication with your customers can help resolve invoice queries quickly.

10. Use your legal rights when necessary
Companies must be prepared to exercise legal muscle when required. Businesses may be entitled to charge statutory interest and claim debt recovery costs on overdue invoices, subject to relevant rules and contractual terms. Just making customers aware of these rights can encourage payment.

A summary of best practice
Many successful SMEs follow this sequence:

1. Credit check new customers.
2. Agree terms in writing.
3. Take a deposit where appropriate.
4. Invoice immediately.
5. Include a payment link.
6. Send automated reminders three to five days before the due date.
7. Phone the customer within a few days of any missed payment.
8. Escalate quickly if payment remains outstanding.

If you need help with your invoicing and collections strategy, please contact us. We’re here to help.
 
Business concerns over costs hit record highs as AI adoption accelerates
UK businesses are increasingly worried about rising operating costs, with concern over both energy and fuel prices reaching their highest levels since the Office for National Statistics (ONS) began tracking them.

The latest ONS data came as the International Monetary Fund (IMF) reported that the UK economy would expand faster than expected - 1.3% in 2026, up from the 1% it predicted in July. But like the ONS, it said that despite encouraging figures, higher energy prices and interest rates will hit the economy in 2027.

The findings suggest UK businesses are facing a combination of rising cost pressures, ongoing supply chain uncertainty and growing climate-related concerns, while at the same time accelerating their investment in AI technologies.

ONS data for late September 2026 show that 72% of businesses were concerned about energy prices, the highest proportion recorded since the question was introduced in March 2026. The accommodation and food services sector reported the greatest level of anxiety, with 91% of firms expressing concern.

Worries about fuel costs were even more widespread. Nearly three-quarters of businesses (73%) said they were concerned about increases in fuel prices, the highest figure since the measure was introduced in May 2026. Businesses in the transport and storage sector were particularly affected, with 60% describing themselves as ‘very concerned’.

Supply chain questions
International conflict emerged as the most commonly cited risk to supply chains, with 32% of businesses mentioning it, along with shipping disruption at 21%. Almost half (48%) of businesses employing 10 or more people reported concerns about at least one factor that could affect supply chains, including climate issues, over the next year. While this was little changed from August, it was 17 percentage points higher than a year earlier.

Concerns about environmental risks are rising, with 41% of firms expressing worries about the potential impact of climate change on their operations. This is the highest level recorded since February 2023.

AI use increases
The ONS found use of Artificial Intelligence (AI) continues to grow rapidly across the economy. Around 30% of businesses reported using at least one form of AI technology in September 2026, more than triple the 9% recorded when the question was first asked in September 2023. Adoption is particularly strong among larger organisations, with 51% of businesses employing 250 or more staff now using AI, compared to 19% three years ago.

Among AI users with at least 10 employees, administrative and clerical roles were most likely to be affected by the technology. Some 38% of businesses identified these occupations as the most impacted, up from 35% in June 2026 and 29% when the question was introduced in December 2025.

To read the full report, go to: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/bulletins/businessinsightsandimpactontheukeconomy/latest
 
New transport security funding for UK companies
Small UK companies are being asked to develop security ideas and products for Britain’s transport sector with an unusually tight deadline. As the geopolitical situation becomes increasingly dangerous, with sabotage to the UK’s physical and cyber infrastructure by countries such as Russia and Iran increasing daily, new security projects are topping the government’s ‘hopeful’ list.

A second cycle of the UK’s Security Open Call has been launched by UK Defence Innovation (UKDI), with the addition of areas focused on by the Department for Transport (DfT) and successful proposals can access funding up to £350,000.

Submissions for stage one have a deadline of 29 October 2026.

Cycle 2 of the Security Open Call is now looking for technologies that can detect threats, improve screening and protect passengers and goods, while keeping the UK moving.

The funding opportunities follow on from Cycle 1, which sought ideas for Home Office and National Protective Security Authority (NPSA) priorities including cyber resilience, border security and protective security technologies. The Department for Transport (DfT) focus areas are a new addition alongside the Home Office and National Protective Security Authority projects.

What innovations
This Open Call is looking for 'innovative' technologies and approaches to areas such as:

• Aviation hold baggage screening.
• Detection of explosive threats in complex freight and large loads.
• Low divestment walk-through people and bag screening.
• Security situational awareness sensor integration with autonomous and robotic platforms.
• Passenger screening - alarm resolution.

Overall, the solutions should improve the detection of malicious threats, support screening operators through automation by exploiting emerging technologies to enhance the security and resilience of the UK’s transport network.

Application process
The Security Open Call uses a two-stage application process to identify promising ideas at pace. Applicants will first submit a Stage 1 overview proposal. Ideas that align well with the Competition Focus Areas, demonstrate a strong chance of successful delivery and meet the customer’s needs will be invited to progress to a full Stage 2 submission.

UKDI’s Innovation Partners are available to support innovators throughout the application process.

Funding available
Successful proposals can be funded up to £350,000. Projects can run for a maximum of 12 months, with an optional testing and trialling phase costed into proposals to extend activity to 18 months.

Submissions to Stage 1 will close at midday on 29 October (GMT). Please see the full competition document for full details of stages and submission dates.

The full competition document can be found here: https://www.gov.uk/government/publications/competition-document-ukdi-security-open-call-2026-cycle-2

Further information on working with UK Defence Innovation (UKDI) can be found here: https://www.gov.uk/guidance/how-to-work-with-uk-defence-innovation-ukdi#advice-and-guidance-contact-your-local-innovation-partner 

9th October 2026 – Hillmans Weekly Update

9th October 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

Businesses worry legislative tax burden is increasing
The annual report from the Administrative Burdens Advisory Board (ABAB) shows a slight improvement in HMRC’s performance but there is a rising concern over legislative burden and continued difficulties with communication channels.

The 'Tell ABAB report 2025 to 2026' represents the views of the small business community and provides detailed research to HMRC on their policies and procedures.

Legislative burden and impact
One highlight of the report was the growing concern that complying with the tax rules was becoming increasingly unwieldy. A significant 61.6% of respondents said the legislative burden had worsened over the last 12 months, with 62.8% saying they had been impacted by legislative changes.

MTD
There was a more positive perception of Making Tax Digital (MTD) for Income Tax than last year, although only slightly. Respondents said that MTD was expected to have less impact on cost and time than reported in 2025, with approximately 43% saying it would have no significant effects compared with 27% in 2025.

In spite of this, 27.2% still expected to incur significant costs. The vast majority of respondents (60.1%) felt that there are no benefits to MTD for Income Tax, a view broadly in line with the opinions reported in 2025 (65.2%).

It is worth noting that the survey was carried out before the first filing deadline for those mandated to use MTD for Income Tax from April 2026.

HMRC communications and guidance
For the last few years, HMRC have received poor scores on their communications. This year, satisfaction levels for telephone and webchat services have gradually increased, but they still receive a mixed feedback.

Across all services, except for the HMRC app, the largest group of respondents continued to rate usefulness as ‘poor’. Fifty-five per cent regarded the telephone service as poor, along with 46% for the webchat service.

The largest group of respondents for the HMRC App service rated it as ‘average’.

Regarding HMRC’s guidance documents, 31.3% felt that it was helpful, with only 14.4% considering it unhelpful.

Most startling were the responses from those who had started a business in the last 12 months. An overwhelming 72% of those respondents said the guidance did not help them complete their task (an increase from 56.6% in 2025).

Customer experience
The majority of respondents said their experience with HMRC over the last 12 months had not changed. Only 6.0% remarked that their customer experience had improved, while a substantial 31.4% said it had worsened.

Taxpayers continued to find helpline responses not up to scratch, with 47.2% saying that response times were poor, although this improved by 8.3% from 2025.

Only 3.9% of respondents rated the response times as very good.

AI use
The ABAB found that the use of generative AI for tax queries continued to rise. 32.4% reported having used systems such as ChatGPT or CoPilot to seek an answer to a tax query, up from 10.9% in 2025.

Worryingly, 61.1% felt they received an answer which resolved their query, although 7.2% of those then reported that the answer was, in fact, not reliable.

The survey had a record 10,195 responses, up from 3,146 last year. 88% of responses came from businesses and 12% from agents. 

If you have issues communicating with HMRC or need help with their guidelines, please contact us; we're here to help.
 
Have you checked your labour supply chains?
New laws from the beginning of the month make it critical for companies that rely on subcontractors, agency staff or complex labour supply chains to review their compliance procedures to identify employees who do not have the right to work in the UK.

Employers can be sent to jail for five years and pay an unlimited fine if found guilty of employing people who the employer knew or had ‘reasonable cause to believe’ did not have the right to work in the UK.

The Border Security, Asylum and Immigration Act 2025 came into force on 1 October 2026 and will extend Right to Work obligations. The new framework means that companies can no longer assume that ‘self-employed’ individuals or subcontracted employee arrangements sit outside the regime.

To protect themselves, companies must have processes for verifying workers’ identities.

If checks are conducted as prescribed by the Home Office in legislation and statutory codes of practice in force at the time the check was made, employers will have a statutory excuse against the liability of a civil penalty.

The Home Office points out that the ability to work without permission is a driver of illegal migration. This can expose individuals to exploitation and abuse, including modern slavery. It may also have an adverse impact on compliant employers and the wider labour market, including through unfair competition and breaches of employment and tax laws.

To find out more, the Home Office’s draft employer's guide to right to work checks, read here.

https://www.gov.uk/government/publications/right-to-work-checks-employers-guide/draft-employers-guide-to-right-to-work-checks-16-july-2026-accessible
 
UK’s productivity puzzle solved by statistical overhaul
Last month the UK’s labour productivity figures doubled. This wasn’t an example of workers becoming more diligent and industrious; it resulted from a modernising in the way the Office for National Statistics (ONS) gathered its figures.

The UK has long been an international outlier when it comes to productivity, with the ONS reporting that between 2009 and 2019 productivity annual growth was 0.7%. The new figures for the same period are nearly double that at 1.3%.

This overhaul of how it is measured follows years of concern that the country’s labour market data has been inaccurate.

Labour productivity, commonly measured as output per hour worked, is one of the most important indicators of economic performance because it shows how efficiently labour is being used. Before the 2008 financial crisis, UK productivity grew by around 2% annually, but officially it collapsed to just 0.7% a year between 2009 and 2019.

This ‘productivity puzzle’, it turns out, was due to flaws in statistical measurement.

After years of research and following recommendations made by the Organisation for Economic Co-operation and Development (OECD) as far back as 2018, the ONS accepted that some of the problem lay in how labour input was being measured.

While Gross Domestic Product (GDP) and Gross Value Added (GVA) figures remain unchanged, the ONS estimates of hours worked have been improved significantly. It seems that not taking account of holidays, for example, has proved critical to the miscalculations.

What was the problem?
A key issue stemmed from the long-running Labour Force Survey (LFS), which asked individuals how many hours they had worked in the previous week. The weaknesses in this approach were that employees often struggled to recall their actual hours and tended to report their usual or contracted hours instead.

The problem was compounded when one household member answered on behalf of others.

Falling survey response rates created further distortions. During periods such as July and August, when many workers were on holiday, missing responses were often assumed to reflect normal working patterns rather than reduced hours because of annual leave. As response rates declined, particularly in recent years, this has led to a growing overstatement of hours worked across the economy.
The consequence was significant. If total output is divided by an inflated number of hours, productivity appears weaker than it really is.

The ONS believes this measurement issue partly explains why UK productivity growth looked lower than that of comparable countries.

New approach
To address these shortcomings, the ONS has developed a new ‘component approach’ that combines information from several datasets rather than relying heavily on a single survey.

Under the revised methodology, estimates of jobs are drawn from the Workforce Jobs series, which is based on employer data and better captures those working in the UK economy. These figures are supplemented with HMRC's Real-Time Information (RTI) payroll records, which provide near real-time data on employees on company payrolls.

The approach to measuring hours worked has also changed substantially. Instead of asking workers to recall actual hours worked in a particular week, the ONS now uses usual working hours from the Annual Survey of Hours and Earnings (ASHE). It then adjusts these figures using information on annual leave, sickness absence, unpaid overtime and other factors that affect actual working time.

Additional employment information comes from the Business Register and Employment Survey (BRES) and quarterly business surveys.

This combination of administrative records and business surveys follows international best practice and creates a more robust picture of labour input.

The new analysis suggests that average hours worked have fallen more sharply since the financial crisis than previously thought. As a result, productivity growth per hour was stronger than earlier estimates indicated.

A productivity slowdown remains, but the scale of the puzzle has effectively been cut in half.

For businesses, the takeaway highlights the importance of accurate data. Reliable statistics provide a clearer understanding of economic performance and offer a stronger foundation for decisions on investment, innovation and growth.
 
Consultation on modernising corporate reporting 
A new consultation that proposes loosening the rules on company reporting standards could both benefit companies and give cause for concern.

The consultation, 'Modernising Corporate Reporting to support long-term economic growth', proposes reforming the corporate reporting framework. Proposals include extending the audit exemption to some medium-sized companies, replacing the current distributable profits regime with a solvency-based approach and tightening micro-entity reporting.

The wholesale review of the corporate reporting framework is intended, says the government, to support economic growth and strengthen the UK's international competitiveness. 

The government has built the consultation around five key principles:  

• Clarity of purpose: the purpose of the annual report and accounts should be to provide financially material and decision-useful information to investors and creditors. 

• Flexibility and trust: companies should be trusted to tell their own business story and tailor disclosures to the needs of investors and creditors. 

• Simplicity and coherence: reporting requirements should not be duplicated across company law, accounting standards and regulatory rules.  

• Proportionality: reporting requirements should reflect company size, ownership structure and economic impact, ensuring costs are justified by benefits. 

• Fit for the future: the government wants the UK’s legal framework to support business for the next decade and beyond. 

The central proposals for consultation include clarifying who the annual report and accounts are for by reaffirming that they are a document primarily intended for investors and creditors. 

Streamlining and simplifying
The proposals intend to simplify which companies are required to report different types of information and create a lighter regulatory load for Small and Medium-sized Enterprises (SMEs).

Some of the proposals include streamlining the range of accounting standards available for use by UK companies to four main standards and allowing certain medium-sized companies to qualify for an audit exemption, which could be extended to give reporting exemptions to smaller companies.

The proposal places a greater emphasis on self-regulation, something that might concern consumers and businesses
For example, the consultation proposes replacing the 'true and fair presumption' for micro-entities with an obligation to prepare accounts that comply with ‘micro-entity standards’ and introduce a new voluntary assurance standard, pitched at a level designed to give lenders confidence in SME accounts. 

The government wants to create a streamlined legislative framework that moves detailed requirements out of the law and into relevant standards, including making the financial reporting law clearer and more coherent.   

Other proposals include:

• Moving corporate governance reporting from company to group level and removing or simplifying certain remuneration reporting requirements. 

• Replace the complex rules on distributable profits and capital maintenance with a solvency-based regime.  

• Proposals would require companies to make a statement that the dividend will not affect the company's ability to continue as a going concern. 

• Simplify remuneration and corporate governance reporting.  

• Embrace digital communications.  

The government has said that any relevant changes may also apply to Limited Liability Partnerships (LLPs). 

The consultation closes on 30 November 2026. The full consultation details and questions can be found here: https://www.gov.uk/government/consultations/modernising-corporate-reporting
 
New export financing for Brazil, Morocco and Mexico
Overseas buyers will be offered a new UK Export Finance loan guarantee to incentivise buying goods and services from British companies. The UK Export Finance pilot initiative, worth up to £5 billion, will help British exports gain a foothold in high-growth economies like Brazil, Morocco and Mexico, creating jobs and stimulating growth back home.

The Flexible Finance pilot product will see select buyers who operate in fast-growing economies like Brazil, Morocco and Mexico, where British exports could be greater, access loans on more flexible terms to incentivise buying British.

It will cover up to 80% of a commercial loan for select overseas buyers and the government hopes that it will give British businesses more export opportunities. Unlike UKEF’s existing guarantees, this product will give borrowers greater flexibility in how they use funding.

2nd October 2026 – Hillmans Weekly Update

Welcome to our latest round-up of the latest business and tax news for our clients. Please contact us if you want to talk about how these updates affect you. We are here to support you!

Have a great weekend. 

Kind regards,
 
Steve
 
Steven Hillman BSc (Hons) FCA
Chartered Accountant
Tel: 01934 444100
https://www.hillmans.co.uk

CRYPTOASSETS: WHY INVESTORS MUST DECLARE INCOME AND GAINS TO HMRC
Cryptoassets have moved into the financial mainstream, with many individuals now holding Bitcoin, Ethereum and other digital assets alongside traditional investments. However, a common misconception is that crypto transactions are anonymous or outside the scope of UK taxation. They are not.

HMRC expects taxpayers to declare taxable crypto income and gains, and failure to do so can lead to interest, penalties and, in serious cases, investigations. HMRC have published extensive guidance on the taxation of cryptoassets and receives increasing amounts of information from exchanges and other sources. Starting from the 2026 calendar year, HMRC will receive tax-relevant information on UK-based individuals who have used UK cryptoasset service providers.

HOW CRYPTO IS TAXED IN THE UK
The UK does not have a separate crypto tax regime. Instead, existing tax rules are applied depending on the nature of the transaction.

For most private investors, profits are taxed under the Capital Gains Tax (CGT) rules. A taxable disposal can occur when you:

• Sell crypto for cash.
• Exchange one cryptoasset for another.
• Use crypto to buy goods or services.
• Gift crypto to someone other than a spouse or civil partner.

Many people are surprised to learn that swapping Bitcoin for Ethereum is a taxable event, even if no cash is received.

Some crypto receipts may instead be subject to Income Tax – for example, rewards from mining and staking. For most, this will be taxed as miscellaneous, not trading income.

WHY DISCLOSURE MATTERS
Crypto transactions often generate a large number of taxable events, making record-keeping essential. Investors should retain details of purchases, disposals, transfers, fees and wallet addresses.

Importantly, moving crypto between wallets that you beneficially own is generally not a disposal for tax purposes. However, most other transactions may have tax consequences.

With HMRC increasing its focus on crypto compliance, you should review your holdings regularly and ensure that all taxable income and gains are reported correctly on your tax returns. Seeking advice early can help avoid costly mistakes and provide peace of mind that your crypto tax affairs are fully compliant. Where an error in a return is discovered, a voluntary disclosure will often produce a better outcome than waiting for HMRC to make contact, so do contact us if you have any concerns. 
 
WHEN IS VAT ON CARS RECLAIMABLE?
A business can normally only reclaim VAT on the purchase of a car if the car is not available for any private use whatsoever. This is a very strict test. Typically, the business must be able to demonstrate that private use is prohibited and impossible in practice.

Examples where VAT recovery may be allowed are set out in HMRC guidance and The Value Added Tax (Input Tax) Order 1992 and include:

• A car used exclusively as a taxi.
• A driving school vehicle with dual controls.
• A car acquired solely for resale by a motor dealer.
• A car held for short-term hire.
• A company car kept permanently on business premises and not available for private use.

In most owner-managed businesses, VAT on the purchase of a company car cannot be reclaimed because the vehicle is available for private use, even if actual private use is minimal.

By contrast, VAT on vans is generally recoverable, subject to the normal input tax rules. VAT on running costs of a car, such as repairs and servicing, is usually recoverable to the extent they relate to the business.

In a recent case, Luxurico Ltd v HMRC [2026] TC10001, the First Tier Tribunal (FTT) found that input VAT was recoverable on a luxury vehicle hire business's acquisition of a hypercar (an ultra-exclusive, ultra-high-performance sports car). The taxpayer's intention at the time of purchase, and not necessarily subsequent use, was key in determining allowability.

Luxurico argued that at the time they purchased the supercar, they intended to use it as a private-hire vehicle. HMRC sought to deny the VAT reclaim on the basis that there was little evidence that the car was subsequently used for its intended purpose.

The FTT’s focus was on Luxurico's intention at the time the VAT was incurred - HMRC's reliance on the vehicle's subsequent use missed the point. A number of factors had resulted in reduced hiring of the vehicle, but the FTT found that at the time of acquisition, Luxurico intended primarily to use the vehicle for a relevant purpose.
The appeal was allowed, meaning Luxurico was able to reclaim the VAT incurred on the supercar.

VAT on cars remains difficult to recover, but this case demonstrates that it is not always impossible. Contact us if you have, or are contemplating, the purchase of a car for business purposes and we can advise on the options for VAT recovery.

MTD FOR INCOME TAX: THE STORY CONTINUES IN 2027
Certain landlords and self-employed individuals should start preparing now for the next phase of Making Tax Digital (MTD) for Income Tax. Taxpayers with qualifying income above £30,000 in the 2025/26 tax year will be required to join MTD from 6 April 2027. Qualifying income includes gross income from property lettings and self-employment before expenses are deducted.

MTD represents the biggest change to the Self Assessment system for many years. Instead of keeping paper records and submitting information annually, affected taxpayers will need to maintain digital records using compatible software and send quarterly updates of their income and expenses to HMRC. At the end of the tax year, a final digital submission will be required to confirm their tax position.

Landlords and traders with income above the threshold should review their bookkeeping processes now and speak to us about suitable software. Early preparation will make the transition much smoother and help avoid compliance issues when MTD becomes mandatory in April 2027.
 
ADDITIONAL SELF ASSESSMENT DISCLOSURES FOR DIRECTORS IN 2025/26
Additional reporting requirements for directors of close companies came into force for Self Assessment returns from 2025/26 onwards. A close company is generally a company that is controlled by five or fewer shareholders or by its directors. The new requirements mean directors of close companies must report the following on their tax return: 

• The name of the close company.
• The registered number of the close company. 
• The amount of income they receive from dividends from that company in that tax year. 
• The highest percentage of their shareholding. 

The Self Assessment return already included boxes to indicate whether a taxpayer was a director of a close company, but completing these boxes was optional. The new rules mean directors of close companies are now obligated to complete the boxes. 

Only directors who currently need to complete a Self Assessment return need to report close company information. 

If the company is only a close company for part of the tax year, the new boxes must still be completed. 

HMRC have recently confirmed the following: 

• Where directors are unpaid and/or have zero shareholdings in the close company, they must still complete the new boxes on the tax return. Listing unpaid directorships in the additional information box is not an acceptable option. 
• Directors of dormant close companies must also complete the new boxes. 
• Directors of registered charities or Community Interest Companies do not need to complete the new boxes where they did not receive, or become entitled to receive, any employment income or dividend income. 

A £60 penalty may apply for the incorrect completion of the close company boxes. It is therefore important that you advise us of any directorships that you held in a tax year.