Weekly VAT News

The Council has reported that it has formally adopted two regulations implementing the tariff-related commitments set out in the EU-US Joint Statement of 21 August 2025. The adoption completes the legislative process and confirms the EU’s commitment to a stable, predictable and mutually beneficial transatlantic trade relationship, while preserving the necessary guardrails to protect European economic interests.

The two regulations remove the remaining EU customs duties on US industrial goods, introduce preferential access for certain US seafood and non-sensitive agricultural products through tariff rate quotas and reduced tariffs, and extend the suspension of duties on lobster imports, including processed lobster (from all countries on a most favoured nation basis).

The regulations also contain reinforced safeguard and suspension mechanisms. In particular, the regulations provide for a dedicated safeguard mechanism enabling the Commission to act swiftly in cases of significant import surges causing or threatening to cause serious injury to EU operators, and strengthen the EU’s ability to suspend tariff preferences where the US does not respect its commitments, undermines the objectives of the Joint Statement, or otherwise disrupts balanced trade relations, including through discriminatory measures.

Next steps

The two regulations will now be signed and published in the Official Journal, entering into force on the day following their publication. The main regulation will cease to apply at the end of 2029. By 30 June 2029, the Commission will present a comprehensive assessment of their impact on EU-US trade flows, tariff revenue and economic effects, including on SMEs, and will accompany it with a legislative proposal to extend the application of the regulations, where appropriate. The regulation concerning lobster imports applies retroactively from 1 August 2025 and will expire on 31 July 2030 unless further action is taken.

For further information please contact Shenshen Lin, Ross Freeman or Antony Raine.

Wednesday 8 July

Judgment -T-356/25 Rapera

Topics – Joint and several liability, tax representatives

A Greek referral which seeks clarification regarding Articles 204 and 205 of the VAT Directive and the principle of proportionality regarding joint and several liability of tax representatives (who merely submit VAT returns), particularly whether national laws can impose such liability without assessing the representative’s involvement in the taxable activities. The case hinges on national provisions which stipulate that a tax representative can be held jointly liable for VAT obligations without requiring evidence of their involvement in the taxable person’s economic activities.

A non-resident taxpayer may appoint a natural or legal person, resident for tax purposes in Greece, as a tax agent for the purpose of complying with the formal obligations under the Code, to whom any correspondence concerning the taxpayer shall be sent. In relation to the obligations relating to VAT and IPT, the person designated as the tax agent shall not be responsible for the fulfilment or otherwise of the taxpayer’s tax obligations.

Wednesday 15 July

Judgment – T-268/25 Sampension Livsforsikring

Topics – VAT grouping eligibility

A Danish referral which asks whether the first paragraph of Article 11 of the VAT Directive, read in conjunction with the second paragraph thereof, is to be interpreted as precluding legislation of a Member State under which eligibility for creating a VAT group comprising persons not engaged in activity subject to registration or not engaged in economic activity, is subject to the condition that one person in the VAT group directly or indirectly owns 100% of the other person or persons in the VAT group. If question 1 is answered in the affirmative, does Article 11 have direct effect in the Member State, with the result that taxable persons are entitled to be registered as a VAT group in cases where the legislation of that Member State does not comply with that provision and cannot be interpreted in accordance therewith.

Topics – Exemption for supplies of education – definition of an eligible body – charge to funds provided by the Secretary of State – college of a UK university – teaching English as a foreign language

St Patrick's International College Ltd, London College of Contemporary Arts Ltd and Interactive Manchester Ltd v HMRC

The Court of Appeal (CA) has released its decision in these cases concerning whether certain supplies of education made by the Appellants should have been treated as exempt for VAT purposes. It was common ground that Article 132(1)(i) of the VAT Directive is directly effective and that the Appellants are entitled to rely on it if the UK had failed to implement it properly. In brief, the Appellants say that the domestic provisions do not properly implement Article 132(1)(i) and their supplies should be treated as exempt.

In the alternative, the Appellants contend that their supplies are exempt under provisions in Group 6 of Schedule 9, VATA94 on the following grounds:

1. That supplies of education by the First and Second Appellants were exempt under Item 5B of Group 6 because the consideration payable for those courses was ultimately a charge to funds provided by the Secretary of State
2. That the Third Appellant was ‘a college of a UK university’ and thus an eligible body within Note 1(b) of Group 6; and/or
3. That since the Third Appellant provided the teaching of English as a foreign language (TEFL) and was therefore an ‘eligible body’ within Note 1(f) of Group 6, all of its supplies of education should be treated as exempt

These appeals are concerned with higher education courses. The appellants are all members of a group of companies known as Global University Systems Group (GUS). The education provided by each of the appellants in the relevant period can be summarised as follows:

• St Patrick's International College Limited (SPIC) operated a further and higher education college in London providing, amongst other courses, a range of HNCs and HNDs in business management, tourism and hospitality, technology and health and social care
• London College of Contemporary Arts Limited (LCCA) was a provider of further and higher education courses in fashion, visual arts, media, business and hospitality. Until 2016 it was a school of another company in the GUS Group. From 2016 it operated in partnership with South Thames College and Walsall College, both of which are providers of further and higher education
• Interactive Manchester Limited (IMAN) offered undergraduate and postgraduate degree courses as well as HNC and HND courses, professional programmes, and certain English language courses. It was divided into four schools: an accountancy school, a business school, an English language school and a vocational school. Until 2016, IMAN also provided courses in collaboration with the University of Wales, London Metropolitan University, and Grenoble Graduate School of Business

The First-tier Tribunal (FTT) dismissed the Appellants' appeals finding that (a) the Appellants could not rely on the direct effect of Art. 132(1)(i) because the UK’s implementation (in the form of Group 6) did not infringe the principle of fiscal neutrality; and (b) except for IMAN’s supplies of TEFL, the Appellants’ supplies did not fall within the terms of Group 6.

The Appellants appealed to the Upper Tribunal (UT) on the issues concerning fiscal neutrality, on whether the consideration for their supplies was ultimately a charge to funds provided by the Secretary of State, and the scope of the exemption for IMAN. The UT dismissed the appeals on each of these points.

The Appellants were granted permission to appeal to the CA on the following grounds:

• Ground 1: the UT erred in concluding that in relation to the supplier condition in Art. 132(1)(i) the correct question is not whether the suppliers are sufficiently similar from the point of view of the typical consumer but whether they are comparable, having regard to the legal and regulatory framework under which the education is provided and the domestic legislation by which the Member State exercises its discretion to recognise other organisations
• Ground 2: even if the UT was correct to conclude as it did, a Member State cannot impose conditions for recognition which do not apply to other recognised suppliers. In particular, the UK cannot justify its failure to recognise the Appellants as Alternative Providers (APs) of higher education courses which qualify for funding from the SLC, on the basis that they do not have university title or DAPs or charitable status, when the same is true of other recognised (exempt) providers of such courses
• Ground 3: the UT erred in holding that a taxable person could be an eligible body within Note 1(f) of Group 6 in respect only of TEFL supplies and not for its supplies of education generally; Note 2 of Group 6 is incompatible with EU law

The Appellants argued that, when assessing whether the UK’s implementation of the education exemption in Article 132(1)(i) complies with the principle of fiscal neutrality, the court must apply the test established in Rank Group Plc (Rank), under which a difference in VAT treatment is unlawful where the relevant services are identical or similar from the perspective of the typical consumer and meet the same needs.

They contended that it was common ground that the HNC and HND courses they supplied were sufficiently similar to those supplied by universities and further education colleges, and that the UT erred in finding that the consumer’s perspective was not decisive.

The Appellants contended that the UT’s conclusion on this issue was inconsistent with the decision of this court in Leisure, Independence, Friendship and Enablement Services (LIFE).

HMRC argued that the Rank test applies only to the similarity of supplies and not to supplier conditions within exemptions, relying on European authorities concerning other VAT exemptions and contending that fiscal neutrality in this context is not assessed through the eyes of the consumer.

HMRC accepted, however, that its position was inconsistent with the decision in LIFE but argued that the CA was not bound by it.

The CA considered whether the UK had correctly implemented the VAT exemption for education contained in Article 132(1)(i) and, in particular, whether the exclusion of certain APs from the exemption breached the EU principle of fiscal neutrality.

The CA recalled that it was common ground that the Appellants supplied education and had educational aims similar to those of universities, colleges of universities and further education corporations (FECs), which qualified as ‘eligible bodies’ under Group 6 of Schedule 9 VATA94. The Appellants argued that the UK legislation failed properly to implement Article 132(1)(i) and that they were entitled to rely directly on the Directive.

Article 132(1)(i) exempts certain educational supplies where two cumulative conditions are satisfied: first, there must be a qualifying educational supply; secondly, the supply must be made by a public body or by another organisation recognised by the Member State as having similar objects. While Member States enjoy discretion in deciding which organisations to recognise, that discretion is constrained by EU law, including the principles of equal treatment and fiscal neutrality. Fiscal neutrality generally prohibits the different VAT treatment of similar services that compete with one another.

The FTT concluded the UK’s implementation of the exemption did not breach fiscal neutrality. It considered that the critical issue was not simply whether the educational services supplied by the appellants were similar to those provided by exempt institutions, but whether the suppliers themselves were sufficiently comparable. The FTT found significant differences between the regulatory regimes applicable to universities and colleges, which were subject to stricter requirements relating to degree-awarding powers and university title, and the Appellants, who lacked those characteristics. It also noted that FECs were required to be charities, whereas the Appellants were not. Accordingly, the FTT held that Parliament was entitled to recognise universities, colleges and FECs while excluding the Appellants. The UT upheld that reasoning.

The CA considered LIFE in detail. That case concerned welfare services exempt under Article 132(1)(g) and whether restricting the exemption to certain categories of provider was compatible with fiscal neutrality. In LIFE, the court reviewed Rank extensively and emphasised that the assessment of similarity generally requires consideration of the viewpoint of the typical consumer. Most importantly, it accepted an argument that the relevant question was whether differences in regulation made a significant difference to consumers. The CA in the present case concluded that this formed part of the ratio of LIFE. It therefore established that, when considering compliance with fiscal neutrality in relation to an Article 132 containing a supplier condition, the similarity analysis must be conducted from the perspective of the typical consumer.

The CA rejected HMRC’s arguments that LIFE was not binding. It disagreed with the suggestion that the reasoning in LIFE was insufficiently explained, holding that the Court had clearly derived its approach from Rank and had expressly applied that test to the supplier condition under Article 132(1)(g). HMRC had identified no authority overlooked by the court and no subsequent development in European jurisprudence requiring a different conclusion.

The CA also rejected HMRC’s reliance on the principle of EU law supremacy. It held that the issue was not one of conflict between domestic and EU law, but rather the correct interpretation of EU law itself. In such circumstances, ordinary principles of precedent applied, and the Court was bound by its previous decision unless one of the recognised exceptions applied.

Having concluded that LIFE was binding and that the reasoning concerning Article 132(1)(g) applied equally to Article 132(1)(i), the CA held that the FTT and UT had erred in law by rejecting the Rank test. The proper approach required assessment from the perspective of the typical consumer. Since HMRC had not challenged the Appellants’ contention that their HNC and HND courses were indistinguishable from those offered by recognised providers from the perspective of students, and had not disputed that application of the Rank test would inevitably lead to a finding that excluding APs breached fiscal neutrality, the CA considered the appeal had to succeed.

The CA therefore allowed the appeal on Ground 1. Because that conclusion was sufficient to dispose of the case, it did not determine Grounds 2 and 3, which concerned alternative challenges relating to the criteria for recognition and the scope of the exemption for providers of TEFL. The CA emphasised that the result followed from the binding authority of LIFE rather than a full reconsideration of the underlying merits of HMRC’s arguments. Lord Justice Lewison expressly observed that the Court was bound by LIFE whether it was right or wrong. Sir Launcelot Henderson and Lord Justice Lewison both agreed with the leading judgment, with the result that the Appellants’ supplies were entitled to succeed on the basis that the UK’s exclusion of APs from the exemption was incompatible with the principle of fiscal neutrality as interpreted through the consumer-focused test established in Rank and applied in LIFE.

Comments: This judgment is potentially significant for Alternative Providers and other educational institutions whose supplies are similar to those of exempt universities, university colleges or further education institutions. Such providers should consider whether they have grounds to challenge historic VAT assessments, submit repayment claims, or pursue existing disputes with HMRC on the basis that their exclusion from exemption breached the principle of fiscal neutrality. The Court held that similarity must be assessed from the perspective of the typical consumer and accepted that students would not regard the relevant HNC and HND courses as materially different from those offered by recognised exempt providers. Providers should therefore review their past and current VAT treatment, quantify any potential recoveries, and assess the impact on ongoing compliance. However, they should also be mindful that HMRC may seek to appeal the decision, as the Court indicated that HMRC’s substantive arguments had considerable force despite being bound by the earlier decision in LIFE.

For further information please contact Carolyn Norfolk.

Topics – Recovery of input tax – economic activity – whether economic activity ceased when business transferred out of VAT group

Compound Photonics Group Limited

The First-tier Tribunal (FTT) has released its decision in this case concerning the recovery of input tax and whether economic activity ceased when a business was transferred out of a VAT group, but Intellectual Property (IP) was retained. It also concerns the subsequent sale of IP and whether this constituted an economic activity.

Compound Photonics Group Limited (CPGL) was the representative member of a VAT group comprising itself and two other companies: Compound Photonics Limited (CPL), and Compound Photonics UK Limited (CPUK). CPL and CPUK were 100% subsidiaries of CPGL.

CPL owned 100% of a US company, Compound Photonics US Corporation (CPUS) which was outside the CPGL VAT group.

CPGL voluntarily registered for VAT on an intending trader basis with effect from 1 January 2011. CPGL and its subsidiaries were intended to be the vehicle for the development and commercialisation of academic research into gallium arsenide and liquid crystal technology. The intention was to develop, manufacture and sell a very small projector. In June 2013, CPUK acquired a large gallium arsenide fabrication plant, located in Newton Aycliffe in the UK.

In May 2017, the UK Group’s operating business in the UK (including the Newton Aycliffe facility) was sold to a third party but certain IP rights relating to the business were retained by CPL. The UK entities remained in existence and incurred professional, administrative, legal and corporate costs.

CPUS continued its operating business in the USA. This business included continuing the development of its display technology.

On 6 January 2022, the remaining operating assets of the UK Group, including the IP rights held by CPL, were sold to Snap Inc. A portion of the sale proceeds was allocated to CPL.

HMRC subsequently assessed CPGL and disallowed substantial amounts of input VAT on the basis that the VAT group no longer carried out any economic activity and was therefore not entitled to recover the VAT incurred.

The dispute concerns the concept of ‘economic activity’ pursuant to the VAT Directive and VATA94. Under those provisions, a taxable person is entitled to deduct input VAT only where it carries on an economic activity and where the relevant costs are used for taxable transactions. Economic activity includes the exploitation of tangible or intangible property for the purpose of obtaining income on a continuing basis.

The FTT firstly considered whether the VAT group carried on any actual economic activity after the May 2017 disposal. It concluded that the UK entities no longer undertook manufacturing, research or development activities, had no employees and made no supplies for consideration. Although some IP remained within the UK group, there was no evidence that the group licensed that IP, charged for its use, or entered into any arrangement under which consideration was payable.

The FTT concluded on this point that there was no actual economic activity during the period following the disposal of the operating business.

The FTT went on to consider whether the group nevertheless remained an ‘intending trader’ with an ongoing intention to carry on an economic activity in the future.

The FTT recalled that CPGL had argued that the retained IP would eventually be exploited and that the UK entities might in future receive income from products developed by CPUS. However, it held that these intentions were unsupported by objective evidence. The UK companies functioned only as a passive holding structure, undertaking corporate administration, funding activities and litigation management. There were no agreements, business plans, licensing arrangements, marketing activities or other concrete steps demonstrating an intention to make taxable supplies in the future.

The FTT held that the asserted intentions amounted to no more than a ‘hope’ that opportunities might emerge if CPUS succeeded commercially. Such aspirations were too vague and speculative to constitute an economic activity for VAT purposes.

However, regarding the sale of the remaining operating assets of the UK Group, including the IP rights, to Snap Inc, the FTT accepted that the sale occurred, that consideration was received and that the sale represented a supply for consideration by the VAT group. The FTT rejected HMRC’s argument that a one-off sale could not constitute an economic activity, finding that the correct focus was whether the transaction was undertaken for the purpose of obtaining income from assets generated through an earlier economic activity.

The FTT noted that the IP sold to Snap Inc had been developed through the group’s historic business activities, and the sale represented the realisation of value from those activities. The transaction satisfied the principles established in Wakefield College and was also properly characterised as a termination activity connected with the winding up of the group’s former business. On that basis, the sale to Snap Inc constituted an economic activity and was capable of supporting a right to deduct input VAT.

In conclusion, the FTT held that:

• With the exception of the sale to Snap Inc, CPGL did not carry on any actual economic activity following the May 2017 disposal
• CPGL did not have any ongoing intention to carry on an economic activity following the May 2017 disposal
• The sale to Snap Inc was nonetheless an instance of economic activity carrying a right to input tax deduction

The appeal was therefore partially successful at this stage - the separate question of whether the disputed input VAT had a sufficient ‘direct and immediate link’ to the sale to Snap Inc remains unresolved and would need to be determined separately if not agreed between the parties.

Comments: This decision highlights that businesses cannot rely on a mere intention to trade or exploit assets in the future to recover input VAT; they must be able to demonstrate economic activity through objective evidence such as agreements, business plans or concrete preparatory actions. It also confirms that simply holding assets, including intellectual property, is unlikely to be sufficient. However, the disposal of assets created through earlier business activities may itself constitute economic activity. Businesses should therefore maintain robust evidence of their trading intentions and ensure a clear connection exists between costs incurred and taxable supplies made. Where there are no current taxable supplies but, as here, there may be an intention to sell a business or part of it in the future, it is particularly important to document the link between the input tax incurred and the potential future supplies. It remains to be seen whether the taxpayer in this case will be able to persuade HMRC or the Tribunal that such links existed in this case.

Topics – COVID-19 – Temporary reduced VAT Rate

Next Generation Clubs Limited

The First-tier Tribunal (FTT) has released its decision in this case concerning the rejection by HMRC of an Error Correction Notice (ECN) to claim repayment of output tax in respect of membership subscriptions for the period 15 July 2021 to 31 March 2022. Next Generation Clubs Limited (NGCL) asserted that the temporary reduced rate of VAT (TRR) should apply to the subscriptions under Group 16 of Schedule 7A, VATA94. The TRR was introduced during the COVID-19 pandemic for certain admissions to attractions and cultural facilities.

NGCL is the representative member of a VAT group whose members operate leisure and recreational sites trading under, inter alia, the ‘David Lloyd’ brand. It was argued that the David Lloyd clubs provide a wide range of facilities including gyms, swimming pools, racquet sports, spas, clubrooms, children's activities, social events and workspaces, which were sufficiently similar to the attractions listed in the legislation.

The Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020– Article 4 inserts Group 16 into Schedule 7A. Item 1 of Group 16 provides for ‘supplies of a right of admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas and exhibitions and similar cultural events and facilities but excluding any supplies that are exempt supplies by virtue of Items 1 or 2 in Group 13 of Schedule 9’.

The appeal turned on the interpretation of the legislation conferring the TRR and whether the services provided by David Lloyd fall within that legislation. The FTT was asked to consider whether the services provided by David Lloyd fell within Group 16; in particular, did David Lloyd’s services count as ‘rights of admission to similar cultural events and facilities’.

The FTT considered the domestic legislation and the EU law from which it was derived. Group 16 applies the TRR to supplies of a right of admission to specified attractions such as theatres, museums, zoos, cinemas, fairs and amusement parks, together with ‘similar cultural events and facilities’. Both parties accepted that EU case law was relevant to interpreting the provision.

The FTT recalled that reduced-rate provisions must be interpreted strictly and that similarity should be assessed from the perspective of the average consumer by considering the characteristics and purpose of the services concerned.

The FTT noted that the key issue was whether David Lloyd’s membership, viewed as a whole, constituted a supply of ‘rights of admission to facilities’ similar to those listed in Group 16. The FTT considered that the membership was a single composite supply comprising sporting, social and wellness facilities, none of which predominated to such an extent that the overall supply could be characterised solely as one of sporting facilities. It also concluded that ‘cultural events and facilities’ should be read as a description of the listed attractions rather than as imposing a separate requirement for a particular type of cultural content.

Considering the concept of ‘similarity’, the FTT rejected the argument that the clubs were analogous to amusement parks. While both involved leisure and recreational activities, the FTT held that the comparison was too broad and did not reflect how an average consumer would view the facilities. It emphasised that the attractions listed in Group 16 share important common characteristics. They generally possess a principal attraction that draws visitors, such as rides at an amusement park, animals at a zoo, films at a cinema or performances at a theatre. They also provide experiences that are, from the perspective of the average consumer, out of the ordinary rather than part of everyday life.

The FTT considered that in the immediate proceedings, the clubs' offering differed fundamentally from these characteristics. The evidence demonstrated that the business model was intentionally designed to become part of members’ regular lives, encouraging frequent attendance and prolonged use through a mixture of fitness, social, family and work-related facilities. The FTT accepted the witnesses’ descriptions of the clubs as a “third space” or “home away from home”. Unlike the attractions listed in Group 16, David Lloyd did not have a single defining attraction that drew members to the clubs. Instead, its appeal lay in the breadth of facilities and services available. As a result, the FTT concluded that an average consumer would not regard David Lloyd memberships as serving the same needs as admissions to the attractions covered by Group 16.

Although unnecessary to determine the appeal, the FTT also considered whether David Lloyd memberships constituted a ‘right of admission’. In this regard, the FTT concluded that membership was functionally equivalent to a right of access to the clubs and their facilities. Had the underlying facilities fallen within Group 16, the FTT would have regarded the memberships as rights of admission for these purposes. However, this finding did not assist because the clubs themselves were not sufficiently similar to the listed attractions.

In conclusion, the FTT dismissed the appeal. It held that David Lloyd memberships did not qualify for the temporary reduced rate of VAT because the clubs were not similar to the cultural events and facilities listed in Group 16. While the membership provided access to a broad range of leisure and wellness activities, the overall supply was fundamentally different from the attractions contemplated by the legislation. Accordingly, HMRC was correct to reject the ECN, and no VAT repayment was due.

The Exchequer Secretary to the Treasury, Dan Tomlinson, has published a written statement on the VAT treatment of donations of medicines. Changes will be effective from 23 June 2026.

“In response to an oral question on Tuesday 23 June, I announced that the Government will take forward a new approach on VAT on free-of-charge donations of medicines, consisting of either changes to the VAT rules or a reimbursement scheme. I can now give the House further details on this announcement.

Under UK VAT law, some transactions where no money changes hands are treated for VAT purposes as if a supply has been made and so VAT is due – these are known as deemed supplies. These are long standing VAT rules in place to keep the system fair if a business has reclaimed VAT on costs.

Pharmaceutical companies donate certain medicines to the NHS, such as through early access schemes. For many years, under these longstanding VAT rules, some pharmaceutical businesses have been paying VAT on donations of medicines. Other businesses have not, and in 2023 HMRC wrote to the sector to begin the process of making sure firms paid the correct tax.

The Government understands that any additional VAT burden on medicines provided free-of-charge has the potential to impact patient outcomes, and so the Government will bring forward a new approach as soon as possible.

Changes will be effective for donations made on or after 23 June 2026 and the Government will engage with stakeholders on these options.”

For further information please contact Sarah Campbell.

The Taxation (Energy and Vehicles) Bill 2026-27 received its First Reading in Parliament on 24 June 2026. MPs considered the Bill at Second Reading on Wednesday 1 July 2026, followed by Committee of the whole House and Third Reading on the same date. The Bill had its First Reading in the Lords on 2 July, and the remaining stages are due to take place on 14 July.

The text of the Bill and the explanatory notes can be found here.

The Bill makes provision for three previously announced tax measures:

• Increase in the rate of the Electricity Generator Levy (EGL) from 45% to 55% from 1 July 2026
• Increase the rate of Approved Mileage Allowance Payments (AMAPs) with effect from the start of the current tax year (2026/27)
• Introduce a temporary 12-month Vehicle Excise Duty (VED) exemption for certain heavy goods vehicles (HGVs) to apply from 1 July 2026 and 30 June 2027

For further information please contact Richard Norman.

HMRC’s Transformation Roadmap was published in July 2025 and outlined the Government’s vision for a more efficient, modernised and automated tax and customs system.

This progress update shows how the changes being made are allowing HMRC to collect more of the tax that is due while enabling individuals and businesses to focus more on what matters to them – contributing to the Government’s aim to boost economic growth.

The update includes:

• Making Tax Digital (MTD) for income tax goes live
• Increased digital engagement
• Improvements for individuals
• Developments planned for 2026–27
• Customer service improvements
• Greater use of AI and technology
• Stronger compliance and tax gap measures
• Digitalisation of tax administration
• Changes for agents and businesses

The 2026 update shows HMRC moving rapidly towards a digital-first model. Notable developments for businesses are the rollout of MTD for income tax, increased digital self-service, preparations for e-invoicing, expansion of digital communications, and greater compliance activity supported by AI and additional compliance staff.

Please also refer to Annex: Summary of HMRC’s planned activities listed in this Transformation Roadmap Progress update.

This Internal Manual provides technical and procedural advice for staff in HMRC who may have to deal with VAT Statutory Interest claims. It has been updated under VSIM7100 – Processes and procedures: the statutory interest calculator with a link to a newer version of the calculator.

This Notice explains how to claim a VAT refund in the UK if you are established outside the UK. Guidance in section 2.14 – ‘appointing an agent to make a claim on your behalf’, has been updated to explain that if you use an agent, they may need to register as a tax adviser with HMRC.

This Notice explains what you need to include in your Soft Drinks Industry Levy return, how to correct an error in a previous return and what records to keep. The ‘How to submit your return’ section has been updated for submitting returns ending after 1 April 2025.

This Guidance explains how to check which Authorised Economic Operator status you could apply for and their benefits if your business has a role in the international supply chain. The ‘Checks HMRC will carry out against the criteria’ section has been updated to explain that submitting an AEO application confirms the business is available for an on-site HMRC audit visit.

This Guidance explains how to send parcels from Great Britain to Northern Ireland if you're a courier or an express operator. Information has been updated to reflect customs duty changes on low value imports.

Please also refer to:

• How to send parcels from a business in Great Britain to a private individual or a business in Northern Ireland
• Check if you can apply for the UK Carrier Scheme

This Guidance explains how to use an EORI number from an EU country to move goods in and out of Northern Ireland if you’re a business established in the EU.

This Guidance explains how to subscribe or check if you have access to the Customs Declaration Service. Guidance about subscribing with an EORI number from an EU country has been added.

Please also refer to Trading and moving goods in and out of Northern Ireland.

This Guidance explains how to check if you can apply for a repayment or remission of EU import duty paid or reclaim state aid used (also known as 'replenishment of state aid') on goods brought into Northern Ireland, through the Duty Reimbursement Scheme. The 'Claims for multiple movements' section has been updated, goods subject to an EU trade defence can be included as part of a bulk claim.

This Guidance explains how to use a customs comprehensive guarantee to cover Customs Duty, excise duty and import VAT when you regularly import goods or use common and Union transit. It has been updated to confirm that you need to be established in either the UK or the EU to get a customs comprehensive guarantee.

For further information regarding Northern Ireland please contact Michael McNeil or for global trade Gerard Koevoets.

From 1 July 2026, the EU introduced a temporary €3 customs duty on low-value parcels imported from outside the EU, mainly through e-commerce. This includes a wide range of products commonly bought online, such as clothing, toys, electronics and other consumer goods worth up to €150.

European Commission news articles are available here and here.

Please also refer to

• Questions and answers on €3 customs duty
• Guidance document
• Commission welcomes historic agreement to reform EU Customs Union
• E-commerce: product compliance and safety
• EU introduces customs duties on low-value e-commerce packages
• Guidance and legal text on temporary flat fee on low-value imports which will apply until 1 July 2028
• VAT treatment of the €3 customs duty on distance sales of imported goods not exceeding €150
• Council Regulation (EU) 2026/382 of 11 February 2026 amending Regulation (EC) No 1186/2009 as regards the elimination of the threshold-based customs duty relief
• Commission Implementing Regulation (EU) 2026/1200 of 5 June 2026 amending Implementing Regulation (EU) 2015/2447 as regards the rules on the implementation of the temporary €3 customs duty on distance sales of imported goods in a consignment with an intrinsic value not exceeding €150
• Register of Commission Documents
• Customs: Council agrees to levy customs duty on small parcels as of 1 July 2026

For further information, please contact Andy Jones (VAT) or Onelia Angelosanto (customs duty).

The European Commission has reported that as of 1 July, two amendments introduced by Commission Implementing Regulation 2026/1422 amending the Union Customs Code Implementing Regulation (UCC IA) to the procedural rules relating to non-preferential proofs of origin are applicable.

In relation to products subject to special non-preferential import arrangements, Articles 57-59 and Annex 22-14 of the UCC-IA have been amended to allow for the use of electronic certificates of origin issued in the ELAN system and to provide for flexibility during the transition to ELAN’s full implementation.

In relation to goods originating in the United States, a new Article 59a of the UCC-IA introduces the requirement of a proof of direct transport or non-alteration as part of the proof of non-preferential origin as a condition for the application of adjusted customs duties and quotas as set out in Regulation (EU) 2026/1455.

The amendments aim to provide the tax authorities with the tools necessary to better monitor the non-preferential origin of goods and to enhance the effective application of the legal framework.

Please also refer to Q&A – UCC-IA Article 59a.

For further information regarding global trade please contact Gerard Koevoets or Penelope Isbecque.