Bi-Monthly Tax Case Round-Up (Dec 2025 – Jan 2026): 7 Decisions with Practical Impact for 2026 Planning

The period between December 2025 and January 2026 delivered a concentrated set of UK tax decisions with immediate implications for corporate transactions, offshore wealth, succession planning, employment terminations, R&D claims, and penalties. In this round-up, we highlight seven judgments that are already influencing how advisers should structure, document, and defend positions in 2026.

1. VAT and Share Disposals: Supreme Court closes the “fundraising” argument

HMRC v Hotel La Tour Ltd [2025] UKSC 46

This is the headline case of the period and a major development for deal teams. Hotel La Tour sold shares in a subsidiary and sought input VAT recovery on professional fees, arguing the disposal was a fundraising step to support its wider taxable business.

The Supreme Court dismissed that approach, holding that the relevant costs had a direct and immediate link to the exempt share sale itself. The future use of proceeds for taxable activities did not change the VAT position.

Practical implication: for many corporate disposals, VAT on transaction fees may now be an irrecoverable cost unless the structure supports a different treatment. VAT needs to be modelled and planned at the outset of any reorganisation or sale process.

2. Remittances: bank transfers count, and credit card analysis remains nuanced

Alimahomed v HMRC [2025] UKUT 428 (TCC)

The Upper Tribunal confirmed that electronic transfers from offshore accounts to UK recipients can constitute remittances. The notion that “bringing” money to the UK requires physical movement was rejected. The decision also shows how fact-specific credit card transactions can be, particularly where liabilities relate to spending that benefits third parties and whether a “relevant debt” has been created.

Practical implication: although the remittance basis ended from 6 April 2025, legacy offshore funds and historic mixed funds remain sensitive. Inadvertent remittances are still a live risk, and the Temporary Repatriation Facility (TRF) window makes careful planning and documentation especially important.

3. Estates and IHT: tax repayment rights form part of the estate

Richard Thomas (as executor) v HMRC [2025] UKFTT 1537 (TC)

The Tribunal held that an income tax repayment (arising because the taxpayer died partway through a tax year) was a chose in action and should be included as part of the estate for IHT purposes. Even where a repayment is not formally “claimed” at the date of death, the entitlement can still be treated as an asset if it is ascertainable.

Practical implication: executors should take a holistic approach to estate assets. Repayment entitlements and accrued tax positions can materially affect IHT reporting and valuations.

4. Share buybacks: capital treatment can apply where there is a genuine trade benefit

   Boulting v HMRC [2025] UKFTT 1272 (TC)

This decision is helpful for owner-managed businesses using buybacks for succession and governance reasons. The Tribunal accepted that capital treatment can apply where the buyback is undertaken for the purpose of benefiting the trade. Importantly, it focused on why the company entered into the buyback, not the shareholder’s personal motivations or the price negotiation.

Practical implication: the quality of contemporaneous evidence is often decisive. Board minutes, rationale papers, and a coherent narrative linking the buyback to commercial trade benefit should be treated as core deliverables—not afterthoughts.

5. BADR penalties: suspension is not a “catch-all” for transactional mistakes

Philip Cox and Debra Cox v HMRC [2026] UKUT 7 (TCC)

The Upper Tribunal upheld HMRC’s refusal to suspend penalties relating to a careless BADR claim. Where an error is a one-off transaction issue rather than a recurring compliance weakness, HMRC may reasonably conclude that “suspension conditions” would not prevent future inaccuracies.

Practical implication: BADR qualification must be validated early, particularly where shareholdings, reorganisations, dilution, or disposals have occurred in the run-up to a sale. Penalty suspension should not be assumed to be available.

6. R&D relief: innovation alone is not enough

   M&C Educational Training Services Ltd v HMRC [2025] UKFTT 1506 (TC)

   
   

The Tribunal rejected an R&D claim for work on an educational/training platform. Although the subject matter touched on metallurgy, the “advance” was ultimately in teaching methodology rather than an advance in science or technology. The claim therefore fell outside the qualifying scope.

Practical implication: R&D claims must demonstrate a genuine scientific or technological advance, not simply commercial novelty or new application in a non-qualifying field. Technical narratives and evidence must be tightly aligned to the statutory test and guidance.

7. Termination payments: PILON not exempt simply because illness is involved

   Rawlinson v HMRC [2026] UKFTT 45 (TC)

This case considered whether a payment in lieu of notice could fall within the disability exemption. The Tribunal found the PILON retained its character as notice-related remuneration, and it was not transformed into an exempt disability payment merely because long-term sickness formed part of the wider background. The decision also highlights procedural points about the correct route to challenge PAYE positions.

Practical implication: termination and settlement documentation must be drafted with precision. Where a disability-related element is intended, it should be clearly identified, separately quantified, and properly evidenced.

What this means for 2026: structure, evidence, and early planning

Across all seven decisions, the repeated message is clear: tax outcomes increasingly turn on the “why” and the “how” supported by documentation, not simply commercial intent or after-the-fact explanations.

For 2026, we recommend paying particular attention to:

• Transaction VAT: model irrecoverable VAT risk early in share disposals and group reorganisations.

• Offshore funds: review remittance exposure for legacy funds and consider planning within the TRF window where appropriate.

• Succession planning: treat buybacks and exits as evidence-led exercises, with robust board and commercial rationale records.

• Reliefs and claims: BADR and R&D both demand front-loaded technical analysis and strong support files.

• Employment exits: ensure settlement structures reflect legal character, with careful drafting and allocation of payments.

If you’d like to read the Dr Frank full article here is the link

How LEXeFISCAL can help

LEXeFISCAL advises corporates, entrepreneurs, and internationally mobile private clients on UK tax planning, cross-border structuring, and complex compliance. If you would like to discuss how any of these cases may affect your position—particularly in relation to transactions, offshore wealth, succession planning, or relief claims—please contact our team.

Disclaimer: This article is for general information only and does not constitute legal or tax advice. Specific advice should be taken for your circumstance.