HMRC v Colchester Institute Corporation [2026] EWCA Civ 363 
 
The Court of Appeal has upheld earlier Tribunal decisions confirming that central government funding received by Further Education (FE) colleges is treated as consideration for business supplies of education. We expect that HMRC will revise its policy, notwithstanding the potential of further appeal to the Supreme Court. As well as colleges, this is expected to have an impact on academies and other publicly funded bodies. For information, read our article here.

Charge My Street Ltd v HMRC [2026] TC09802 
 
This first tier tribunal decision held that electric vehicle charging supplied at public charging stations qualifies for the reduced rate of VAT, rejecting HMRC’s contention that the standard rate should apply. The Tribunal found that public EV charging can fall within the scope of supplies “closely connected with domestic use”, particularly where charging mirrors home based electricity consumption in substance.  
 
The decision challenges HMRC’s published position and their interpretation of ‘domestic use’, and strengthens arguments for applying the reduced rate. As the decision is at the first-tier tribunal level, it is not binding. HMRC has appealed the case to the Upper Tribunal, and HMRC has issued a policy paper stating its position that charging electric vehicles at public charge points continues to be VAT standard-rated . Nevertheless, operators of EV charging infrastructure, including local authorities and energy providers, may wish to consider protective claims or refund opportunities. 

Aspire in the Community Services Ltd v HMRC [2026] TC09789 
 
The decision in this First-tier Tribunal case confirmed that pre-registration input VAT can be recovered by reference to post-registration use, and that HMRC cannot restrict recovery by analysing how the costs were used before registration. The Tribunal rejected HMRC’s approach of linking pre-registration recovery to pre-registration activity, reaffirming that the statutory test looks to intended and actual taxable use after registration.  
 
While the decision is not binding and unlikely to trigger a change in HMRC policy, it is helpful clarification for start-ups, reorganisations, and property projects, and presents a principles-based interpretation of the pre-registration rules. This should strengthen taxpayers’ positions in ongoing disputes with HMRC relating to delayed registration or claims for VAT on significant pre-trading costs.  

Following the introduction of the new VAT relief for business donations of goods to charity from 1 April 2026, HMRC has updated relevant VAT Notices to clarify how the relief should operate in practice. The updates confirm HMRC’s expectations on the valuation of donated goods, eligible categories of goods, and the evidence required from recipient charities.  
 
While the relief is widely welcomed, HMRC has signalled that compliance will still be closely monitored, and further practical guidance from HMRC is expected over the coming months. 

Innovative Bites Ltd v HMRC [2026] UKFTT 500 (TC)  
 
This First‑tier Tribunal has again ruled in favour of the taxpayer, concluding that “Mega Marshmallows” are zero‑rated food and not standard‑rated confectionery. The case returned to the FTT after the Court of Appeal held that the original tribunal had failed to make a clear finding on whether the product was “normally eaten with the fingers”, as required by Note 5 to Group 1, Schedule 8 VATA 1994.  
 
The newly constituted FTT undertook a detailed factual analysis and concluded that Mega Marshmallows are more often eaten in non‑finger ways, typically roasted and consumed on skewers or as part of s’mores. As a result, HMRC’s assessments covering VAT periods from June 2015 to June 2019 were overturned.  
 
The VAT rules on food are notoriously complex, and this decision highlights the multi-pronged approach to HMRC’s classification of food, showing that consumption habits, marketing, and product use are critical.

Since March 2021, HMRC extended its Domestic Reverse Charge scheme to the construction industry in order to combat VAT fraud in the sector. HMRC initially adopted a light touch to DRC compliance, most likely in part to the delayed roll-out of the regime, poor communication, and unclear guidance.  
 
More recently, however, HMRC has become stricter in their enforcement of the measure, resulting in assessments and penalties to tackle non-compliance with the rules and recordkeeping. Where supplies fall under the DRC, the responsibility to account for VAT shifts from the supplier to the customer.  
 
However, in order to determine whether DRC applies, both customer and supplier need to ensure the conditions are met, including whether the supplies would fall under the Construction Industry Scheme, as well as the customer status as an ‘end user’ or ‘intermediary’.  
 
Miscommunication between supplier and customer, insufficient customer due diligence, and incorrect invoicing can therefore lead to significant VAT accounting errors. It is important that those buying or selling construction services are aware of the rules, conditions, and recordkeeping requirements, and that they review their internal due diligence, invoicing, and VAT accounting processes so they can demonstrate to HMRC they are compliant with the DRC.