Tax Matters Digest

Our third article in this edition looks at a First-tier Tribunal case Scheckter v HMRC, which considered restrictions on using losses where a trade was not carried on ‘on a commercial basis’. We frequently view these rules as primarily blocking taxpayers obtaining tax relief for ‘hobby’ activities. The Tribunal decision identifies a potential bear trap which may make the rules more relevant than is often thought – particularly for corporate groups. Our article summarises this aspect of the judgment and the potential impact on corporate loss-makers. The wider judgment will also be of interest to those involved in farming or landed estates.

No edition of Tax Matters Digest is complete without a mention of the OECD! This edition does not disappoint. The OECD recently issued its updated Model Tax Convention (MTC) and associated Commentary. Arguably the most noteworthy of the changes are the updates to the Commentary on the permanent establishment (PE) article of the MTC on what constitutes a ‘fixed place of business’ from remote working. The question of when and where mobile workers might create a PE frequently features as a potential area of concern for international tax professionals. Tax administrations are also increasingly focused on the location of key decision makers and the remuneration of entities that employ those people. To better understand these issues, KPMG conducted a survey across 22 jurisdictions in its global transfer pricing network to identify, based on their experience, which issues arise locally and which do not. The results of this survey were discussed in an article first published in Bloomberg Tax. Our article provides a link to the Bloomberg article and also summarises the survey findings. 

Our penultimate article highlights an area where HMRC are issuing ‘nudge’ letters to individuals who hold employment related securities and asking them to check their employers’ employment-related securities reporting and withholding. Our article contains more information on the letters and what actions employers should consider taking in order to manage the risks associated with such letters.

Our final in-depth article looks at updated guidance that has been published by HMRC which clarifies the new Self Assessment reporting requirements for directors for 2025/26 tax returns. Individuals who are already required to file a Self Assessment return, and who held a directorship in a UK company at any point during the tax year, will generally need to disclose that appointment. HMRC have now clarified the situations where this reporting applies, the information that will be required and the limited exemptions available.

Other News In Brief in this edition highlights the annual report into the Banking Code of Practice and a link to KPMG UK’s latest Economic Outlook as at September 2026. And finally, we include links to our Indirect Tax Weekly Talking Points and Week in Tax editions, providing highlights and analysis of indirect and international tax developments.