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HMRC consultation on reporting company payments to participators

Reporting dividends and loans to directors explained

Paul Twydell, Director, Corporate Tax

The government has launched a consultation on making new requirements to report transactions between close companies and their shareholders.

The consultation runs until 10 June 2026, and the government are seeking views as to whether new reporting requirements should be mandated, the scope of the transactions to be included, and the format and timing.

Crowe UK has responded to the consultation on behalf of our owner-managed business clients, who we expect will be most affected by the new rules, but HMRC consultations are open for any individuals, directors or business owners to respond as well. Read the full HMRC consultation on reporting company payments to participators..

Any time HMRC requests further information from taxpayers it is important that an effective balance is struck between how this will improve the management of tax without causing further onerous administrative burdens to taxpayers.

To this extent, Crowe UK have emphasised that should HMRC require additional disclosure, this should be within the existing corporation tax return rather than any other document. A company is already required to report the balance of directors’ loan accounts which are outstanding at the end of the year through form CT600A. We consider that HMRC can extend the reporting here to cover all loans in the period and ask any suitable further questions as to how the loans have been repaid. Most companies should be able to report this within the existing corporation tax return filing deadlines.

We have stressed to HMRC that the majority of ‘close’ companies, especially those below the audit threshold, would be unable to provide meaningful information ‘live’ throughout the year, such as with Making Tax Digital for VAT and Income Tax. Often, whether an expense is a business expense or directors’ personal expenditure is a decision taken at the end of the year in discussions between the directors and their adviser. Additionally, a company credit card is typically only reconciled at the end of the year. Compliant companies should not be penalised by only being able to report this after the year end.

Some dividends to shareholders come from otherwise dormant holding companies which do not prepare separate monthly accounts apart from those from a subsidiary trading company. These holding companies should not be compelled to prepare monthly accounts solely to tell HMRC of transactions with directors when this can be done as part of the normal end of year CT 600 process.

We have also highlighted to HMRC, the increased reporting at Companies House regarding identity verification as well as the new requirements for mandatory disclosures with related parties in the accounts under FRS102 Section 1A for accounting periods beginning after 1 January 2026. In our view HMRC should demonstrate that it is able to utilise this new information before seeking additional potentially duplicate disclosure from taxpayers.

Crowe UK will continue to track the consultation and HMRC’s response. If you would like to discuss how these proposals may affect your business or group, please get in touch with your usual Crowe UK contact.