Mandatory reporting of close company participator transactions should not result in dual reporting

This was the Institute’s key recommendation in its response to the consultation ‘Reporting company payments to participators - modernising the reporting framework’ which closed last week. Prior to responding to this consultation, the Institute had already discussed its concerns on close company reporting with HMRC in a meeting after the consultation was announced at the Autumn Budget in 2025. 

The Institute’s detailed response can be read in full in the tax representations section of our website but broadly are key recommendations are as follows: 

• Many close company transactions are already reported to HMRC hence there should not be dual reporting if HMRC already has this information at its disposal, 

• Several categories of participator should not be required to report such as passive shareholders, indirectly held interests, corporate participators including any privately owned groups which may be owned by private equity, and trustee or nominee shareholders, 

• HMRC should conduct a full review of how it could better utilise the information sources already reported to create a more joined up picture of transactions with close companies. This can then be used by HMRC to take a more targeted approach to its compliance work on these companies, 

• If HMRC is concerned that record keeping in this population is poor, then it should more frequently utilise its record keeping powers, including the ability to impose penalties, 

• A one size fits all approach to reporting of transactions by close companies would not be proportionate or appropriate. A more targeted compliance and education approach is warranted utilising information HMRC already has at its disposal, and 

• As HMRC intends to work with stakeholders to develop an appropriate framework for the future administration of CT, we are keen that this begin with how the proposals in this consultation can be reframed to be more proportionate and targeted and we are keen to work with HMRC towards that objective.