Tax Disputes newsletter - January 2026

Last January we wrote about how everything felt a bit “déjà vu” – with Trump about to enter the White House for a second term, and an optimistic Labour government still riding off a landslide victory. The start to 2026 feels decidedly different, with significant challenges posed to international order, global markets and by the increasing use of AI in all aspects of life.

It may offer some comfort that HMRC’s resolutions for 2026 remain a constant in an ever-shifting world. The government’s stated emphasis is on increasing tax compliance through a modernisation and bolstering of HMRC’s customer service, increasing use of digital services and AI technologies and investing in debt collection measures, and we will see the results of many of these measures come to life in 2026. Compliance efforts will be assisted by the rollout of the new whistleblowing scheme (discussed further below) and the upcoming mandatory registration for tax advisors who interact with HMRC, possibly through behaviour change alone. Increased scrutiny from HMRC is inevitable, as demonstrated by some of the cases discussed below.

We provide a round-up below of our commentary on a number of recent topics, as well as a look at some recent developments in the case law.

“Check-in” on judicial review claims: success in Hotelbeds

As the tax rules become more complex, and taxpayers look to HMRC guidance and practice to interpret how the law will apply to them, judicial review proceedings of HMRC’s decisions increase in number (and in importance). However, the statistics for judicial review do not inspire confidence for taxpayers – with success rates for taxpayers halving over the past five years. The recent case of R (on the application of Hotelbeds UK Limited) v HMRC [2025] EWHC 2312 (Admin) is, by contrast, a positive example for taxpayers who feel wronged by a decision made by HMRC, and whose claim meets certain criteria. 

Gideon Sanitt and Sophie Rhind take a look at the decision, and reliance on HMRC guidance more generally. Read more.

Is it too late? Appeals following on from Medpro

We wrote in our last newsletter about the unique decision of Medpro Healthcare Limited & Anor v HMRC [2025] UKUT 255 (TCC) in which the Upper Tribunal departed from precedent (Martland) regarding the balance of factors to be considered when allowing late appeals to the Tribunal. We queried the extent to which this change in the law could lead to a different result in most cases. Since then, a number of cases have considered the decision in Medpro, and whether to apply Medpro instead of Martland at all. In each of these cases, the result in applying the two different tests has been the same, but that may not always be the case. In January 2026 the Court of Appeal overturned the Upper Tribunal’s decision in Medpro, finding that the guidance set out in the Martland case was appropriate.

Gideon Sanitt, Sophie Rhind and Ella McCoy consider the issue.

Dishonest assistance? Prove it.

Given the inherent difficulty of obtaining unpaid tax from fraudulent traders, HMRC have in recent years increased their ability to seek these amounts from other parties in the supply chain, often shifting the burden to third parties and intermediaries. It is also common for liquidators of a company to bring civil claims for dishonest assistance against third parties in the supply chain such as, in the case of Transworld v FCIB, the bank which provided the bank accounts used for fraudulent trades. The case is a reminder that dishonesty must be made out on the evidence and will not be inferred from equivocal material. It is also a good reminder to traders to ensure that they have robust compliance procedures and supply chain checks in place.

Gideon Sanitt, James Popperwell, Madeleine Brown and Victoria Braid consider the decision.

Buyback benefit – the FTT decision in Boulting

The recent case of Boulting v HMRC [2025] UKFTT 1272 (TC) dealt with the question of whether a share buyback, in circumstances where a shareholder was causing a board deadlock, could obtain capital treatment. The requirement under dispute was whether the buyback was made wholly or mainly for the purpose of benefiting a trade carried out by the purchasing company. In challenging the position, HMRC cited, amongst other reasons, the fact that the business was profitable at the time and so removing a dissenting shareholder could not have led to a trade benefit for the business. The FTT disagreed, finding that it is the purchasing company’s purpose in entering the buyback that must be assessed. 

Contemporaneous evidence was key in securing the taxpayer’s victory, which is a timely reminder to taxpayers to keep full records when entering into such transactions. Sarah Ling and Ellen Wildig consider the case. Read more.

Whistleblowing scheme – Snitches get riches (and, for the avoidance of doubt, are protected from any retaliatory measures!)

We previously wrote about the planned introduction of a new rewards scheme designed to encourage informants to notify HMRC about tax fraud or evasion. The scheme is now in place, with informants able to receive payouts of up to 15-30% of additional tax collected for eligible tip-offs. The conditions imposed by the scheme may mean that only a small number of disclosures are likely to result in an award, but large corporates and wealthy individuals in particular should be mindful of the scheme, and steps they can take to minimise the risk of reportable issues arising in the first place.

Gideon Sanitt, Helen Harvey, Victoria Braid and Amy Daubeney discuss the new scheme.

Marking their place – HMRC’s updated Transfer Pricing guidance

HMRC has recently published an update to its Transfer Pricing guidance, which sets out HMRC’s expected approach where a taxpayer falls outside of a benchmarked arm’s length range.

Sarah Ling and Wai Wan consider the new guidance, and the renewed need for taxpayers to have quality benchmarking studies in place.

This newsletter was written by Jackelyn West, a Senior Associate in the Litigation, Arbitration and Investigations team.