HAPPY NEW TAX YEAR!
6 April marks the start of the 2026/2027 tax year (1 April for companies), and is the day on which tax rates, allowances and thresholds change, together this year with Making Tax Digital commencing, for the first cohort of taxpayers this applies to. As the changes taking place have been announced over a series of Budgets, or by a government change of policy (think they call this a U turn), we have summarised the key changes, which can be found HERE
A gentle reminder (which was also contained in our tax year-end planning checklist), don’t forget to check your coding notice, which will have now been issued by HMRC and should be checked to make sure the correct tax is being deducted at source on your employment income and/or pension.
We have filed our first 2026 self-assessment tax return for one of our clients, within a week of the new tax year! Showing that tax returns can be filed at the start of the tax year and not left until December/January!
COMPANY HOUSE BREACH!
After a lot of IT update work at Companies House to deal with legislative changes, it has suffered a security breach, believed to be in early October, with a public announcement made in mid-March, following the discovery of the issue. Companies House has been transparent, going public when the issue was discovered, reporting itself to the various government agencies, and its head resigning.The security breach is believed to have exposed directors’ personal details, which if an actor wished to, they could tamper with those records.
What should you do?
First, log into your Companies House account using your usual authentication code. Spend some time reviewing the filing history for everything posted since last October: directors, persons with significant control, registered office, confirmation statements and accounts. Compare every line against your records, to check all is correct. Do the same quick public-register check, then look at the private dashboard. If anything looks wrong — a phantom director, a changed address, an unexpected filing etc — collect screenshots.
Second, put right what you can without delay. Use the correct form, for example, TM01 to remove a bogus director or AD01 to update an address. Lodge a formal complaint with Companies House — they have a simple online process — and, if you suspect fraud or data misuse, report it to Action Fraud and the ICO if personal data is involved.
Third, update your service address right now. Your residential address, which is usually only made available to official authorities and credit agencies, is normally suppressed on the public register, but the breach may have exposed it. However, you should change the public-facing service address to somewhere professional and neutral: for example your accountant’s office, your solicitor’s address, or a reputable virtual-office providers. Do not leave your home as the service address. Harbour Key provide registered office services, should you wish to change from your home address.
There is little more you can currently do, except lodge a formal complaint to Companies House.
Turn this check/review into a habit rather than a one-off response. Set a recurring diary reminder every three months to repeat the check. Ensure every director and PSC has completed identity verification. This is now mandatory for new appointments and being rolled out for existing ones; it makes fraudulent filings far harder.
ELECTRONIC INVOICING – COMPULSORY APRIL 2029
Announced at the Autumn Budget, as of April 2029, all businesses will be required to issue all VAT invoices as e-invoices. This mandatory change was announced without much fanfare from the Treasury or HMRC, and the measure is to be rolled out universally without a staggered start for smaller businesses. HMRC commissioned research to find out how widely e-invoicing was used/understood by small businesses, and a survey of 800 business across all sectors found:
- 25% of SMEs were not familiar with the definition of an e-invoice.
- 69% of SMEs reported that they had not used e-invoicing before
- 91% said they had not seen any HMRC communications about e-invoicing.
All accounting software packages (for example Xero, SAGE) issue electronic invoices and, although nearly all of HK clients use an accounting software package, we are aware of clients who still raise invoices on, say, a word invoice template, as opposed to the software. The announcement of the mandatory issue of an electronic invoice, is another push by HMRC to have all businesses using an electronic software package, and we would recommend for those who don’t to start now.
MANDATORY 60-DAY PAYMENT LIMIT FOR SME’S INVOICES
A measure to enforce big business to pay small businesses on time has been discussed for a number of years, but in April 2027, subject to Government consultation, it should become law.
The Government is looking at a 60 day mandatory limit on settling SME’s invoices, with failure resulting in fines and companies charged 8% plus Bank of England base rate interest on late payments. The government saying it is determined to ‘hold big businesses and persistent offenders to account’.
The regime, if enacted as the Government is discussing, will affect large businesses with turnover above £54m, a balance sheet threshold above £27m and/or 250 employees,
The proposed legislation will look at a ban on the withholding of retention payments under the terms of construction contracts.
DIRECTORS LOAN ACCOUNTS
HMRC is considering plans to introduce more stringent reporting requirements for director loan accounts, and participator loans to connected companies. The move is designed to target what HMRC state is the enormous £14.7bn small business tax gap, which hit a record high in 2024, representing 40% of the theoretical small business total corporation tax liability.
HMRC pointed to a ‘a failure by the company owners to distinguish between the company’s and the participator’s monies’, adding ‘the level of control allows close companies to easily structure their affairs to minimise the tax charge on participators, ranging from benign planning to aggressive avoidance’. The consultation on close companies sets out plans to introduce new requirements to report transactions between close companies and their participators to HMRC with detailed granular reporting. Under the new proposals on director’s loan accounts, the new reporting requirements are:
- The capture of details of any repayments made by a participator to the company with the directors being required to inform HMRC of transactions.
- Extend the requirement to report with more detail, where close companies release or write off loans to their participators.
- Close companies to provide detailed information of transactions between the company and its participators, including:
o payments, via cash, bank transfer or otherwise;
o sales of assets to the company;
o purchases of assets from the company;
o dividends or other distributions; and
o any other transfer of value from the company to the participator.
Director loans have always been problematic, and now there will become an extra layer of tax reporting, added to the enhanced dividend reporting, to give HMRC a clear picture of how a business owner is extracting their shopping.
DATES
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call on 01452 713277
