We hope you enjoy our latest collection of interesting news items and announcements as the end of the summer break comes into view.
There is a lot of information that will impact and be of interest to accountants and their clients which is why we created our accountants hub so you’ll have access to the most important and accurate insolvency information whenever you need it.
But you can’t be everywhere and read everything all at once, so we collect the most interesting and important business and insolvency news stories every week along with regular new blogs on a range of relevant topics for you each and every week.
We’re always keen to hear what you think so email us at ask@businessrescueexpert.co.uk because we really want to write what you really want to read!
One in five small firms struggling to pay tax bills
Nearly 500,000 SMEs have missed tax payment deadlines in the past three years with 19% admitting to missing five or more in the past 12 months.
Cash-flow issues and complex tax rules along with late payment of bills and a general low level of compliance show that small businesses represented 60% of all unpaid tax according to HMRC, up from 48% before the pandemic in 2019/20 to now with the amount owed thought to be approximately £28 billion.
9% of the 5.4 million SMEs in the UK have missed tax payment deadlines for corporation tax, VAT or other taxes in the past three years according to research from Premium Credit but only 12% said they would consider using HMRC’s Time To Pay (TTP) scheme to catch up and avoid additional interest and late payment penalties.
Jennie Hill, Chief Commercial Officer of Premium Credit said the number of small businesses using their payment schemes have more than doubled in two years indicating that “spreading the cost of tax bills over a year for a small fee is more sensible than missing tax deadlines and accruing fines that will simply add to their problems and further restrict cash flow.”
Late payment consultation for small businesses
One reason why SMEs struggle with cashflow is that they are often paid late themselves leading to delicate balancing acts when it comes to meeting their own financial obligations.
In response, the government is planning a major overhaul of late payment rules by legislating for a 60-day payment period with penalties for non-compliance and audit committees who will monitor corporate behaviour.
Estimating that late payment means that 38 SMEs close every day, legislation will be introduced to amend the Late Payment of Commercial Debts (Interest) Act 1998 to remove the exemption that allows businesses to agree to payment terms longer than 60 days if considered not “grossly unfair”.
The proposal is currently out for consultation with the government saying that they may subsequently reduce the limit from 60 days to 45 after five years. The proposals are also designed to stop large businesses from extending their standard payment terms to avoid paying interest on overdue invoices.
Currently late payment is only controlled in a voluntary way through the Fair Payment Code, which sets a recommended 30-day payment period for SME invoices owed by large businesses.
A spokesperson for the government said: “The intention is to address a current negotiating imbalance between small and large businesses, whereby small businesses frequently feel compelled to agree very long payment terms in order to agree a contract.
“Whether the cause is deliberately poor practice such as using late or long payment as a form of “free finance” or more simply administrative errors in processing invoices, the problem remains too widespread despite some recent improvements in performance.”
The new laws will give stronger powers to the Small Business Commissioner (SBC) to issue fines against large businesses, which persistently pay suppliers late, with penalties based on businesses’ unpaid statutory interest liability. The SBC will also carry out spot checks on businesses and enforce a 30-day invoice verification period to speed up resolutions to disputes.
Prime Minister Sir Keir Starmer said: “From builders and electricians to freelance designers and manufacturers, too many hardworking people are being forced to spend precious hours chasing payments instead of doing what they do best, growing their businesses.
“It’s unfair, it’s exhausting and it’s holding Britain back. So, our message is clear: it’s time to pay up.”
HMRC must declare use of AI
A taxpayer has won a case about transparency at tribunal after challenging HMRC’s refusal to disclose whether AI was used to assess their R&D claims.
An R&D tax expert submitted a Freedom of Information (FoI) request to HMRC about its use of generative artificial intelligence (AI) systems and large language models (LLMs) “specifically within the context of the R&D tax credits compliance team.”
Thomasa Elsbury, co-founder of an R&D tax relief consultancy firm, brought the case against the office of the Information Commissioner after it refused to overrule HMRC’s original decision not to disclose information about their use of AI.
After HMRC said it would neither confirm or deny (NCND) the information, the tribunal described this change of position on the information as untenable.
Judge Alexandra Marks said: “The use of AI in sensitive contexts like tax compliance gives rise to concerns about the sensitive intellectual property which is often disclosed in a claim for R&D relief. Transparency is also critically important in the use of AI in government functions, especially where taxpayer rights and compliance mechanisms intersect.
“The lack of transparency breeds speculation and distrust”.
The tribunal found that “the Commissioner misjudged the balance of public interest by accepting the public interest in avoiding fraud yet giving inadequate weight to the societal benefits of transparency, particularly when AI’s role in decision-making is a pressing concern globally.”
UK launches first international AI standards in Accountancy
The British Standards Institution (BSI) has published a new international standard aimed at bringing structure, transparency and trust to the rapidly expanding AI audit sector amid mounting concerns about the proliferation of unchecked providers.
BS ISO/IEC 42006:2025 sets out requirements for bodies providing audit and certification of artificial intelligence management systems. It’s the first global standard of its kind, designed specifically to assess those conducting AI audits, rather than the AI systems themselves.
With hundreds of UK accountants and firms now offering AI assurance, the sector faces growing scrutiny over conflicts of interest and inconsistent methodologies.
The new standard aims to resolve that by establishing a clear competency framework for AI auditors and a structured methodology for certifying bodies assessing compliance with BS ISO/IEC 42001 – the AI management system standard first released in 2023. This earlier framework which has been used to certify accounting organisations outlines how companies should govern the development and deployment of AI systems.
Mark Thirwell, Global Digital Director at BSI said: “There is a risk of a “wild-west” of unchecked providers and the potential for radically different levels of assessment. Only robust, coherent and consistent audits will build much-needed confidence in a safe, secure AI ecosystem.”
Thirwell noted that the guidance marks a “crucial milestone in global AI accountability” and will support responsible innovation by enabling stakeholders to “differentiate credible AI governance implementations from unchecked claims.”
Additionally, a new policy paper has been published by ACCA (the Association of Chartered Certified Accountants) called “AI Assessments: Enhancing Confidence in AI” which argues that accountants and their clients that undertake effective assessments of their AI systems can better harness the potential to boost innovation, productivity and growth.
Helen Brand, chief executive of ACCA, said: “As AI scales across the economy, the ability to trust what it says is not just important, it is vital for the public interest.
“This is an area where we need to bridge skills gaps and build trust in the AI eco-system as part of driving sustainable business. We look forward to collaborating with policymakers and others in this fascinating and important area.”
Number of people paying dividend tax doubles
Almost four million people including directors are expected to pay dividend tax this year with one in five higher rate taxpayers affected as the tax-free allowance is whittled down.
The reduction of the allowance from £5,000 less than a decade ago to only £500 for the current tax year means that the number of those applicable for the tax has more than doubled since 2021/22.
3.7 million people will be liable for tax on dividend income in 2025/26 with HMRC expecting it to raise £18.6 billion. One in five higher rate taxpayers will pay dividend tax of £6,202 on average while the 340,000 additional rate taxpayers will pay approximately £28,879.
Companies House confirms compulsory ID date for directors
From November 18 2025, company directors and people with significant control (PSC) will have to verify their identities to incorporate a company and to become the director of an already existing company.
Additionally, current directors will need to verify their identities when they file their next confirmation statement if it’s after November 18th. PSCs will have 12 months to verify their identities from this date.
The intention is so Companies House has more clarity over who is running businesses. It’s estimated that between six and seven million people will need to verify their identities.
Companies House CEO Louise Smyth CBE said: “Identity verification will play a key role in improving the quality and reliability of our data and tackling misuse of the companies register.
“To support business and help people verify their identities, Companies House is contacting all companies with advice and guidance. This is part of a coordinated effort to help companies to comply. We encourage people to verify as early as possible.
“More than 300,000 individuals have already done so during the current voluntary period, which started in April.
Once the mandatory ID verification comes into force it will become an offence to act as a director or person with significant control without verifying your identity.
HMRC clamping down on employee car ownership schemes
Nearly 80,000 company car and van drivers will be hit by the removal of the tax benefits of employee car ownership schemes (ECOS) next year as income tax liability comes into play.
The draft Finance Bill 2025/26 contains measures to remove the tax benefits associated with employee car ownership schemes from October 6th 2026, moving them into the benefits in kind regime. This will affect an estimated 76,000 individuals currently using the scheme who will now become liable for income tax associated with the benefit.
Vehicles provided through ECOS arrangements will be treated as taxable benefits when made available on restricted terms which are defined based on a set criteria, including where the registered keeper of the vehicle is not transferred and where there’s buyback clause.
These arrangements were designed to avoid “benefit in kind” charges by transferring ownership of the vehicle to the employee on day one of the scheme with payment being made through some form of credit arrangement often via a third party.
These schemes were particularly attractive in the automotive sector where trade discounts on vehicles could mean significant savings.
The change to the tax rules is expected to raise £275 million in the first year of operation in 2026/27, settling at around £200 million a year thereafter although there are likely to be variations as companies will likely change their company car schemes as a result.
The legislation will be introduced through amendments to Chapter 6 of Part 3 of Income Tax (Earnings and Pensions) Act 20023 (ITEPA) (taxable benefits: cars, vans and benefits).
Updated insolvency Code of Ethics launches in October
An updated Code of Ethics for insolvency practitioners focusing on professional behaviour, mindset and the use of technology will come into effect from October.
The revised code has been approved by the Joint Insolvency Committee and the Insolvency Practitioners Association (IPA) and ICAEW and ICAS as the recognised professional bodies.
The expectations relate to their behaviour in their professional life, not just when performing client work so can include work social events even if they occur off premises and out of regular hours.
The revision of the Code also covers presence on social media and posts “which need to reflect the higher professional standards”.