Other news in brief

In August 2026, HMRC updated their Corporate Finance manual to reflect Finance Act 2026 changes relating to the corporate interest restriction (CIR) rules. These changes (broadly) simplified administrative aspects relating to reporting companies for periods of account ending on or after 31 March 2026, including removing the requirement to file reporting company appointments with HMRC for such periods at page CFM98477. HMRC’s updated guidance also makes clear the Audio-Visual Expenditure Credit and Video Game Expenditure Credit should not be excluded when calculating the tax-EBITDA for purposes of the CIR rules.

HMRC have recently made further updates to their guidance on the UK's Pillar Two taxes contained within the Multinational Top-up Tax and Domestic Top-up Tax manual. Updates to page MTT17030 (ownership interests and controlling interests) reflect legislative amendments made by Finance Act 2026, confirming that a main entity is not treated as holding an ownership interest in its permanent establishment. However, HMRC clarify that the responsible member provisions continue to apply. The manual has also been revised at page MTT10210 (excluded entities) and page MTT09520 (consolidated financial statements) to include additional explanation and updated examples on the application of the deemed consolidation test in section 249 Finance (No.2) Act 2023, aimed at helping to reduce the risk of misinterpretation of the provision.

In Oakwood Great Oak Ltd v HMRC [2026] UKFTT 01138 (TC) (Oakwood), the taxpayer succeeded in establishing that a severely deteriorated former dwelling was not ‘suitable for use as a dwelling’ for stamp duty land tax (SDLT) purposes. Higher residential rates of SDLT apply where a building is residential property. This is normally determined by reference to whether the building is used or suitable for use as a dwelling. This question is assessed at the effective date, but ‘suitable for use’ does not mean ready for immediate occupation. The question of suitability is objective and multifactorial, taking into account the building’s characteristics, previous use, condition, safety, ability to be repaired and the works required. Prior decisions indicated that substantial disrepair (such as defective cladding or electric rewiring and boiler replacements) would not necessarily take a property outside the residential category as it did not make the property unsuitable for use as a dwelling, even if it meant that the property was not ready for immediate occupation. The focus had tended to be on whether the repairs were capable of remediation. In this regard, the deterioration to the building must be to such a degree that it causes it to lose the fundamental characteristics and identity of a dwelling. P N Bewley Ltd v HMRC was the only decision in which this high, evidentiary threshold was met, whereby the First-tier Tribunal (FTT) found that a derelict, uninhabitable bungalow permeated with asbestos was non-residential property as its only realistic option was demolition. 

Against that background, Oakwood is notable as only the second case in which the taxpayer succeeded to argue that their previously residential property was chargeable to the lower non-residential rates due to the state of disrepair of the building. The property had previously been used as a dwelling and remained standing, recognisable as a house and theoretically capable of repair. Nevertheless, the FTT found that the combined effect of its three-to-four-year vacancy, extensive structural and fabric defects, widespread asbestos, unsafe condition, consequential reinstatement works and exceptional scale of intervention meant that it had lost the characteristics and identity of a dwelling. Although not binding, the Oakwood decision is helpful to taxpayers because it suggests that cases where a former dwelling is unsuitable for use as a dwelling may not be quite as rare as HMRC’s guidance suggests, even where the property remains standing and repairable.