HMRC has recently opened two consultations which will affect companies. As reported previously, the consultation ‘Modernising and standardising company tax returns’ is open until 4 June 2026 and ‘Reporting company payments to participators - modernising the reporting framework’ is open to 10 June 2026 with responses to be submitted via an online form. On the latter consultation, it is likely to be extremely challenging for HMRC to receive feedback from smaller companies, therefore we believe that the responses from the Professional Bodies, including Chartered Accountants Ireland, will be crucial to properly target any changes. We’d like to hear your views on each of these consultations by close of business on Friday 8 May 2026 by email to tax@charteredaccountants.ie.
Both consultations were first announced at the 2025 Autumn Budget last November. Chartered Accountants Ireland has already discussed its initial concerns about close company reporting with HMRC in a meeting last December.
Reporting company payments to participators - modernising the reporting framework
According to this consultation, close companies would report details of transactions with participators to HMRC. The Government believes that the close relationship between close companies and its participators means that there is an increased risk of tax loss for the Exchequer. Although anti-avoidance legislation is already in place to prevent this, the Government is concerned that HMRC “is not receiving the full picture in terms of how close companies interact with their participators”, and that further action is required to prevent “error and evasion” and reduce the small business tax gap.
The consultation also asks a number of questions about the current rules, including how well understood the close company and loans to participators rules are among the small company population. There are also questions about how small companies currently keep records of transactions with participators, and where they get advice from.
It is highly likely that these proposals are being introduced as an alternative to Making Tax Digital for Corporation Tax which the Government announced at the Autumn Budget 2025 will not be implemented.
The consultation proposes that close companies will be required to provide detailed information on a wide range of transactions with participators, including:
- any payments whether by cash, card, bank transfer, or other method,
- sales/purchases of assets to/from the company,
- dividends and other distributions,
- any other transfers of value from the company to a participator, and
- any repayments, write-offs or releases of loans to participators.
For each transaction the information to be reported would include the recipient’s identity, and the amount and date of each transaction. Currently, the only exception being considered is where information is already reported to HMRC under Real Time Information, for example, directors’ salaries or payrolled benefits.
The consultation does not set out details on the frequency of reporting but does suggest that this could be an annual cycle tied in with the company tax return. However, there are references to more regular or potentially even real-time reporting which would be extremely burdensome and challenging. Methods of reporting suggested in the consultation include updates to the CT600A or company tax return, or a bespoke digital solution.
The consultation says that any new requirements should not introduce disproportionate burdens on companies and should build on existing record-keeping.
Modernising and standardising company tax returns
This consultation seeks views on:
- the proposed implementation timescales and enforcement options for prescribing the format, content and data tagging of Corporation Tax computations, and
- mandatory online filing of amended company tax returns.
The consultation sets out exemptions that would apply to mandatory online filing of amendments and seeks views on whether any additional exemptions should be considered. It also asks whether, for practical reasons, mandation should commence later than 1 April 2027.
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