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Consultation published on reporting company payments to participators in close companies

23 March, 2026

Following an announcement at the 2025 Budget, HMRC have now published a consultation on several proposals for reporting company payments to participators. If implemented, these new reporting requirements could have a significant impact on smaller companies and the tax agents who support them.

The Government is exploring new requirements in response to statistics which say that the small business tax gap is 60% of the overall tax gap and that Corporation Tax makes up a significant proportion of this.

In the consultation, HMRC are seeking to find out about how close companies (being companies controlled by their directors or by five or fewer participators) currently keep records of transactions with their shareholders, what advice they need to make sure they comply with current requirements and how any additional requirements would affect how they operate. 

The proposed additional reporting requirements would see close companies being required to provide HMRC with details of transactions between the company and its participators. This could include cash withdrawals, loans, debts, dividends, other distributions, and transfers of assets to and from the company. But it is unlikely to include employment income reported under PAYE. 

It is expected that HMRC will need to be notified of the recipient, amount and date of each transaction, regardless of whether the transaction is with individual or corporate shareholders. Details of the name, address and National Insurance number of individual shareholders may also be required.

No decisions have been made as to how often this information would need to be provided to HMRC. It could be via the Form CT600 or by a more bespoke digital solution. Respondents to the consultation are asked to share ideas on how this may work from a practical perspective for the companies affected and their tax agents.

The consultation is also exploring the need for additional details to be provided where close companies release or write off loans to their participators. Feedback on the penalty regime, and whether specific penalties should be introduced, is also being sought.

The ATT will be responding to this consultation. If members have any comments or views, please email them to [email protected] by 31 May 2026.