Compliance
Compliance Checklist for Businesses Adapting to Tax System Modernisation
With HMRC’s recent measures around simplification, modernization, and fairness, businesses must adjust—this article outlines actionable compliance steps and example scenarios.
By NomadicTax Research Team • 5-8 min read • July 21, 2026
## What’s Changing: Simplification, Modernisation and Fairness
On **23 June 2026**, HMRC issued a policy suite titled *Tax Update 2026: Simplification, Modernisation and Fairness*. It includes:
- Draft legislations and tax information and impact notes related to **anti-avoidance**, **corporate tax**, **indirect tax**, **tax admin**, and **customs** measures. ([gov.uk](https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness?utm_source=openai))
- Specific proposals: **Capital Gains Tax relief on gifts of business assets**; extended liability for online marketplaces; changes to VAT for land in social housing; penalty reforms, and more. ([gov.uk](https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness?utm_source=openai))
## Key Compliance Areas for Businesses
### VAT and Land
- Businesses involved in **social housing development** should evaluate the proposed VAT relief changes on land used in housing projects, as this could affect costs and project viability. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
- Online marketplaces may be held accountable for VAT liabilities of sellers—prepare to implement due diligence and possibly adjust who is responsible for VAT filing and remittance. ([gov.uk](https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness?utm_source=openai))
### Corporate & Anti-Avoidance
- Be aware of forthcoming changes to **anti-avoidance rules** including: withholding of income tax for ‘Strengthened Reward Scheme’ rewards, reforms around reverse hybrids, and updating computer records laws. Businesses should review mixed income streams and international structures. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
### Reporting and Errors
- Draft legislation includes reforms to how **errors and inaccuracies** are corrected. Companies should enhance internal audit and review processes to catch mistakes early. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
- Benefit-in-kind reporting regulations are changing from April 2027—ensure systems are in place to track and report accurately. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
## Actionable Steps for Businesses Now
- **Conduct a gap analysis**: Map current practices to proposed reforms (online marketplace VAT, social housing VAT, error correction). Identify where systems or policies will need updating.
- **Revamp record-keeping**: As UK moves toward more digital, updated computer records law will require more granular, timely, and accurate data. Invest in software, training, and internal controls.
- **Monitor consultation periods**: Many measures are in draft/consultation stage. Participate if relevant; respond within timeframes so that your sector interests are considered. EV users, landlords, online platforms, etc. ([gov.uk](https://www.gov.uk/government/collections/finance-bill-2026-27-draft-legislation-and-technical-tax-documents?utm_source=openai))
## Example: Property Developer and Social Housing
Imagine **FairBuild Ltd.** is constructing social homes. VAT on the land component of those builds is proposed for relief changes. If enacted, this could reduce VAT input costs but compliance requirements (abilities to track exactly which land is social housing) will tighten. FairBuild should start segregating land costs in accounts and liaising with tax advisors to ensure eligibility.
## Summary
UK tax system is entering a phase of significant reform towards digital, fairer, and more modern administration. Businesses must be proactive: get ready for eVED, PE-exemption mandatory, changes to VAT, anti-avoidance, reporting and error correction. The cost of falling behind could be penalties, lost opportunities, or higher tax bills.