HMRC tax updates: digital tax codes, Corporation Tax penalties and adviser conduct powers
HMRC has issued further updates affecting individual taxpayers, companies, tax advisers and clients with international or cross-border tax matters.
The key message is practical. Members should check which clients may be affected, make sure deadlines are not missed and ensure internal processes are aligned with HMRC’s changing digital and compliance expectations.
Member priority:
Do not treat these updates as general awareness notes. Corporation Tax penalties, adviser conduct powers and CBAM preparation all have practical compliance implications.
Digital tax code change trial: simpler PAYE notices for selected taxpayers
HMRC is running a three-month trial of a new digital tax coding notice. From 18 March 2026, a selected number of customers may see the new notice when they log into their online account.
The trial is designed to test simpler language and make it easier for customers to understand why their tax code has changed. The updated notice also aims to explain how a tax code change affects take-home pay.
Other online improvements include clearer information about what makes up a customer’s tax code and an explanation of each coding item.
The trial only applies to customers with relatively simple circumstances. For example, this may include customers with one live employment or one occupational pension, no special tax code and at least one change to their coding components.
Members may see questions from clients who notice a new format in their online account. Where a client sees incorrect information in a tax code notice, HMRC says they can update details such as estimated pay through the HMRC app or their online account.
Corporation Tax late filing penalties: notices temporarily delayed
From 1 April 2026, Corporation Tax late filing penalties increased for returns with a filing date on or after that date.
HMRC has advised that it is updating its systems until 30 June 2026 so the new penalty amounts are applied correctly. During this period, automatic penalty notices have been temporarily paused to help prevent companies receiving penalty notices for the wrong amount.
This does not mean companies can file late without consequence. Corporation Tax returns are still due on time, and companies that miss the deadline will remain liable for late filing penalties. Additional penalties may also apply if a return is not submitted promptly after the initial deadline.
HMRC expects the penalty notice process to recommence from July 2026. Companies may then begin receiving penalty notices automatically.
Recommended action for members
Make sure company clients do not confuse delayed notices with relaxed filing rules. The obligation to file on time has not changed.
Read HMRC guidance on increases to Corporation Tax late filing penalties and check Corporation Tax return guidance on GOV.UK.
HMRC enhanced powers: stronger action against tax adviser misconduct
From 1 April 2026, HMRC’s stronger powers to tackle tax advisers who deliberately facilitate non-compliance came into force.
The updated guidance explains how HMRC may investigate and penalise advisers suspected of sanctionable conduct. HMRC describes this as conduct where an adviser intentionally helps clients pay less tax than they owe.
The guidance also explains how and when HMRC may publish certain information relating to misconduct by an adviser.
This is a standards issue for the wider profession. Members should make sure that advice, client communications, tax positions and internal records can be justified. Weak documentation, unclear client instructions or poor review processes create unnecessary risk.
Compliance reminder
If a tax position is aggressive, unsupported or poorly evidenced, it is not enough to say the client asked for it. Advisers need clear records, proper review and a defensible basis for any work completed.
Read HMRC guidance on tax adviser sanctionable conduct and review HMRC’s technical guidance on tackling tax adviser facilitated non-compliance.
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UK Carbon Border Adjustment Mechanism: businesses should prepare ahead of 2027
The UK Carbon Border Adjustment Mechanism, known as CBAM, will be introduced from 1 January 2027. It will affect businesses importing certain goods into the UK from five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel.
Primary legislation was introduced in Finance Act 2026. Draft secondary legislation setting out how the scheme will operate was published for consultation on 9 April 2026.
The consultation closed at 11:59pm on 21 May 2026. Although the consultation window has closed, affected businesses should still review the available policy material and prepare for the operational impact of CBAM ahead of 2027.
Members with clients who import goods in the affected sectors should treat this as an early warning. CBAM is not a last-minute compliance task. Businesses may need to review supply chains, import records, data capture, supplier information and reporting responsibilities.
HMRC has also published a CBAM stakeholder pack with support materials for trade associations, industry groups, representative bodies and other organisations.
Read the UK CBAM policy summary, view the CBAM emissions and verification consultation and read HMRC’s CBAM factsheet.
Temporary Repatriation Facility: support for former remittance basis users
HMRC has highlighted support on the Temporary Repatriation Facility, known as TRF. The TRF is a time-limited measure available from 6 April 2025 to 5 April 2028.
The facility allows UK resident individuals who were previously taxed on the remittance basis to designate certain unremitted or uncertain amounts of foreign income and gains and pay a reduced tax rate.
HMRC’s support covers areas including the designation process, qualifying overseas capital, uncertain amounts, time limits and record-keeping, mixed-fund ordering rules, offshore transfer rules, joint accounts and third parties.
Members advising clients with foreign income and gains should be careful here. This is a technical area and is not suitable for assumptions. Eligibility, records, mixed funds and timing all matter.
The original HMRC update referred to a live webinar on 6 May 2026. HMRC now provides recorded webinar support and written guidance for agents and taxpayers.
View HMRC webinars and support for tax agents, read HMRC helpsheet HS264 on the Temporary Repatriation Facility and review HMRC’s Residence, Domicile and Remittance Basis Manual guidance on TRF.
What IAB members should do next
Members should review the update against their firm, their clients and any higher-risk areas of work. The most important actions are:
- Make clients aware that selected taxpayers may see a new digital tax coding notice in their online account.
- Remind company clients that Corporation Tax return deadlines still apply, even while automatic penalty notices are temporarily paused.
- Review internal tax advice processes against HMRC’s enhanced powers for adviser misconduct.
- Identify clients importing aluminium, cement, fertiliser, hydrogen, iron or steel products into the UK.
- Encourage potentially affected importers to review CBAM guidance before the 1 January 2027 start date.
- Review TRF guidance carefully where clients previously used the remittance basis and have relevant foreign income or gains.
Useful HMRC and GOV.UK links
Sign in to HMRC online services
Corporation Tax late filing penalty increases
How HMRC deals with tax adviser sanctionable conduct
Technical guidance on tax adviser facilitated non-compliance
CBAM emissions and verification consultation
HMRC webinars and support for tax agents
HS264, remittance basis and the Temporary Repatriation Facility
FAQs
Who may see HMRC’s new digital tax coding notice?
Selected customers with simpler PAYE circumstances may see the new notice when they log into their HMRC online account during the trial.
Have Corporation Tax filing deadlines changed?
No. HMRC has temporarily paused automatic penalty notices while systems are updated, but Corporation Tax returns are still due on time.
What is tax adviser sanctionable conduct?
HMRC describes sanctionable conduct as conduct where a tax adviser deliberately contributes to non-compliance, including intentionally helping clients pay less tax than they owe.
Which sectors are affected by UK CBAM?
UK CBAM will affect imports from the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors.
What is the Temporary Repatriation Facility?
The Temporary Repatriation Facility allows eligible UK resident individuals who previously used the remittance basis to designate certain foreign income and gains and pay a reduced tax rate during the facility period.
