Three separate HMRC changes surfaced within days of each other in the latest Agent Update, and taken together they’re a useful reminder that compliance deadlines and enforcement powers don’t stay still just because the news agenda is elsewhere. None of the three is dramatic on its own, but each is worth five minutes of attention if it touches how you trade.
Here’s what’s changed, and who needs to act on it.
The children’s VAT rate has reverted to 20%
The temporary 5% reduced rate of VAT on children’s meals, tickets and family attractions ended on 1 September, with the affected supplies reverting to the standard 20% rate. If you run a café, restaurant or family attraction that was charging the reduced rate over the summer, your till system, menu pricing and any online booking prices need to reflect 20% VAT from that date onward — HMRC’s own guidance (Revenue and Customs Brief 5 2026) sets out exactly which supplies were covered, and it’s worth checking against that rather than assuming your till software updated itself correctly.
Corporation Tax late-filing penalty notices are back
HMRC has confirmed that Corporation Tax late-filing penalty notices, paused for a systems update, are being issued again. The underlying penalty scale hasn’t changed: a return filed even one day after the deadline attracts an automatic £100 penalty, rising to £200 if it’s more than three months late. Miss six months and HMRC can issue its own estimate of your Corporation Tax bill and add a 10% penalty on top of that estimate; miss twelve months and a further 10% penalty applies to any tax still unpaid. File late three times in a row and those flat penalties jump from £100 to £500 each time. If you had a return sitting just past deadline during the pause, expect the notice to catch up with you now.
Till fraud: possessing the software is now enough
The most significant of the three changes is a new factsheet (CC/FS68) confirming that simply possessing electronic sales suppression — “till fraud” — software or hardware can now be penalised, even if it’s never actually been used to hide a sale. Electronic sales suppression covers any tool that can quietly alter or delete electronic sales records after the fact, and HMRC has already shown it’s willing to act on this, including raids and arrests where suppression is suspected. If you use a till or EPOS system supplied or modified by a third party, it’s worth confirming in writing that it doesn’t include this kind of functionality — “I didn’t know it could do that” isn’t a defence once the factsheet is in force.
Limited company and sole trader perspectives
Sole trader: A sole trader running a seaside café had been charging 5% VAT on children’s ice-cream sundaes advertised as part of a family meal deal since May. She updated her till system’s VAT code on 1 September after seeing the reversion mentioned in her bookkeeping software’s newsletter, and went back through August’s takings to double-check nothing needed correcting before her next VAT return.
Limited company: A limited company operating three soft-play centres had a Corporation Tax return that went in four days late back in July, while HMRC’s penalty notices were paused. When notices resumed in September, the £100 automatic penalty arrived as expected — the director had already budgeted for it rather than being caught out, having read that the pause was administrative rather than a change to the underlying rule.
Quick checklist
- Check whether any of your pricing, till codes or booking systems were charging the temporary 5% VAT rate, and confirm they’ve reverted to 20% from 1 September.
- If a Corporation Tax return is even a day late, expect the standard penalty scale to apply and budget for it rather than assuming the earlier pause still stands.
- If a till, EPOS or point-of-sale system was supplied, customised or “optimised” by a third party, get written confirmation it has no electronic sales suppression functionality.
- Remember that possession alone is now enough to create a problem — actual use isn’t required.
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