When HMRC Asks for the Records, It Asks About the Past

October 29, 2026

London · October 2026

The Budget on 28 October 2026 announced more resources for HMRC, alongside proposals to modernise its information powers. A tribunal decision released nine days earlier is a useful reminder of what such checks look at: past records, and what they showed at the time.

What is changing

The Budget 2026 document announces investment in an additional 670 HMRC compliance officers, building on previous commitments to recruit 5,500, by 2029-30.

Information powers are moving too. HMRC published draft legislation in July to reform its information and inspection powers under Schedule 36 of the Finance Act 2008 and to modernise the law on computer records, to help HMRC "access and process information in a modern digital economy". Armstrong Watson's Budget note says the Budget confirms reforms that broaden the information HMRC can request when identifying a taxpayer. It adds that the changes do not give HMRC an unrestricted right to inspect every taxpayer's accounting software, but that where HMRC already has a legal entitlement to information, the modernised rules may help it obtain information held in digital systems.

A third change, set out in an HMRC policy paper published in July, is about publicity. Subject to statutory conditions, HMRC may publish more about deliberate non-compliance, including tax and penalty details and relevant personal liability notices issued to company officers. Those changes are expected to apply to deliberate non-compliance after Royal Assent to Finance Bill 2026-27. Separately, the publication threshold rises from £25,000 to £50,000 of potential lost revenue from the November 2026 list.

What the tribunal said

On 19 October 2026 the First-tier Tribunal released its full decision in Unatrade Ltd v HMRC [2026] UKFTT 01438 (TC). The company bought luxury goods, mainly watches, from UK retailers for export to Hong Kong, and claimed input VAT. When HMRC checked a return, it was given till receipts, bank statements and sales and export records.

HMRC took the view that the documents were not valid VAT invoices. Many showed no purchaser details, or someone else's, and many stated no VAT rate or amount. HMRC declined to use its discretion to accept alternative evidence for most of the claim and allowed 10%. The tribunal held that any proper exercise of discretion would have produced the same outcome, without deciding whether HMRC's original approach was flawed. It dismissed the appeal. It found that calculating VAT from a gross price was an assumption rather than evidence that VAT had been charged, and that the discretion exists to allow defective invoices to be corrected, not to allow deduction without that evidence.

This note makes no comment on the company or its advisers. The case turned on what the documents said at the time. Nothing in it concerned altered records.

Records at the time

Separately from the VAT issues in Unatrade, businesses may need to establish what a file contained on a particular date and whether it has changed since.

Records kept in ordinary software can often be edited later, and an edit does not always leave an obvious trace. When questions come months or years later, a business and its accountants can find themselves comparing versions and email threads rather than looking at one agreed file.

I handle business development and communications for Partisan, which was founded by Oliver. Partisan records a file's fingerprint without seeing or keeping the file, gives a dated receipt, and shows the file is unchanged since it was recorded.

That is a narrow promise. It does not say whether a figure is right, whether an invoice meets the VAT rules, or when a document was first created. It would not have added a missing VAT amount to a till receipt. It can establish whether a file presented today matches the file recorded on a given date.

If that would help the records you or your clients keep, you can book a demo or get in touch at partisangateway.com.

Charles Pycraft

This note is general commentary on public sources and is not tax advice. Further reading: VATupdate's summary of the decision.