Modernising the Administration of Corporation Tax — call for evidence

Question 1

Summary

Accepted Answer

Subject of this call for evidence

The purpose of this call for evidence is to gather views on the future of Corporation Tax administration and explore how it could evolve to better support companies, agents and government.

It seeks views on how the long-term future of Corporation Tax administration could make it easier for businesses to understand and meet their obligations, make administration easier and give greater clarity and confidence. This includes exploring how a more modern and joined-up system could make better use of information, reduce duplication and provide more proportionate approaches for companies with different needs and circumstances. The government is also interested in understanding the support companies may need to adapt to any future changes.

Scope of this call for evidence

This call for evidence focuses on the administration of Corporation Tax. This means how companies meet their Corporation Tax obligations in practice, including the processes they follow, the systems and software they use and how they interact with HM Revenue and Customs (HMRC), directly or through a third party.

The document takes a long-term view to reform and does not propose immediate changes to current obligations or specific Corporation Tax rules. Its primary focus is administrative reform. However, the government recognises that administration, legislative requirements, clearer rules, data and technology can interact. Evidence on those dependencies and trade-offs is welcome where it is relevant to improving administration.

The government is also separately exploring targeted opportunities to simplify specific areas of the Corporation Tax system, through the ‘Corporate Tax Simplification for Business Investment’ publication. Stakeholders interested in specific simplification proposals are encouraged to engage through that publication and process.

Who should read this

This call for evidence will be of interest to companies of all sizes and other entities within the charge to Corporation Tax, including charities and Community Amateur Sports Clubs (CASCs) and certain unincorporated associations. The government is also interested in hearing from anyone involved in Corporation Tax administration, including tax advisers, accountants, bookkeepers, software providers, business system providers, industry bodies and trade associations.

Duration

The call for evidence will run for 12 weeks from 28 October 2026 to 20 January 2027.

Lead official

The lead officials are V Solan and C White of HMRC.

How to respond or enquire about this call for evidence

You can respond to this call for evidence by submitting this online form or by sending responses to ctmodernisation@hmrc.gov.uk.

Additional ways to be involved

The government welcomes discussions with interested parties and will be holding a series of round table discussions and one-to-one meetings. If you would like to meet with policy officials, please contact HMRC at ctmodernisation@hmrc.gov.uk.

After the call for evidence

The government will analyse and publish a response to the views expressed by stakeholders, including details of the next stages of consultation.

Question 2

Foreword

Accepted Answer

The government is determined to support businesses across Britain and make sure they have the confidence to invest, innovate, create wealth, and drive growth in every postcode.

A tax administration system that is simple to engage with, gives clarity and supports businesses to get things right first time is an important part of creating the conditions for long-term economic growth.

As part of the UK’s tax system, Corporation Tax raises revenue that funds public services, while supporting a competitive environment in which businesses can succeed. Companies should be able to understand what they need to do, access the right information and support, and meet their obligations without unnecessary cost, duplication or uncertainty.

Through HMRC’s Transformation Roadmap, the government has set out an ambitious long-term vision for a more modern, effective and responsive tax administration system. As part of that ambition, we want Corporation Tax administration to work better for the businesses and intermediaries that use it. We want the system to be easier to understand and navigate, and better suited to the different needs and circumstances of companies.

This call for evidence is an important step in shaping that vision. It seeks views on how Corporation Tax administration could be made simpler and more proportionate, while giving companies greater clarity and making it easier to get things right first time. We want to make it easier for companies to understand what they need to do, meet their obligations and focus their time and resources on running and growing their businesses.

Corporation Tax administration must work for a diverse population, from newly incorporated companies and growing firms to large and complex multinational groups. Their needs and circumstances may vary, but all companies should benefit from administration that is clear, efficient and proportionate. A system that makes it easier for companies to meet their obligations can reduce avoidable mistakes, support fairness and protect public revenue.

The evidence and insights you provide will help shape a simpler, more effective and more resilient Corporation Tax administration system that supports growth, encourages compliance, reduces unnecessary administration, and is fit for the future.

RT Hon James Murray MP
Financial Secretary to the Treasury and Paymaster General

Question 3

1. Introduction

Accepted Answer

Corporation Tax applies to a diverse population, from small and micro companies to large complex multinational groups. Challenges arise differently across the population. For example, smaller companies may have limited access to specialist tax support, while larger and more complex companies may need to integrate Corporation Tax requirements into sophisticated accounting, finance, and business systems. Whilst their circumstances may differ, all companies should be able to understand their obligations, access the information and support they need, and interact with the Corporation Tax system as efficiently as possible.

The government recognises that companies, agents and software providers need clarity about the future direction of Corporation Tax administration. It also recognises that stakeholders have recently engaged with a number of consultations and reforms relating to Corporation Tax administration and wider business reporting. This call for evidence therefore takes a longer-term view, looking beyond individual reforms to explore how Corporation Tax administration could evolve over time and be clearer and easier for the companies and intermediaries that use it.

Advances in technology, software and the way businesses operate also create opportunities to rethink how Corporation Tax is administered over the longer term. The aim is not simply to modernise existing processes, but to explore how administration could be simpler, more joined up and more proportionate, reducing unnecessary effort and better supporting businesses to invest and grow. A modern Corporation Tax administration system should help businesses and their advisers meet their obligations with confidence, minimise unnecessary duplication and allow HMRC to provide more effective support.

To help illustrate this diversity, this call for evidence refers to the company size categories used in the UK corporate reporting framework. Under company law, companies are classified as micro-entities, small, medium-sized or large based on criteria relating to turnover, balance sheet total and average number of employees. A company generally qualifies for a category where it meets at least 2 of the 3 thresholds shown in the table below. While these categories provide a useful way of describing different parts of the Corporation Tax population, companies within the same size category may have very different characteristics, capabilities and administrative needs, and company size is only one factor that may be relevant when considering the future administration of Corporation Tax.

Companies qualify if they meet at least 2 of the 3 criteria	Micro-entity	Small	Medium	Large
Annual turnover	≤ £1 million	≤ £15 million	≤ £54 million	> £54 million
Balance sheet total (gross assets)	≤ £500,000	≤ £7.5 million	≤ £27 million	> £27 million
Average number of employees	≤ 10	≤ 50	≤ 250	> 250

Note: ‘Nano’ is also sometimes used to refer to companies smaller than micro-entities, although definitions vary. For the purposes of this call for evidence, the term refers to companies with turnover up to the VAT registration threshold.

Making Corporation Tax administration easier to understand and navigate can also support better compliance and fairness. In 2024 to 2025, the Corporation Tax, Tax gap was estimated at £21 billion, equivalent to 18.1% of total Corporation Tax liabilities. While small businesses account for the largest share of the overall tax gap, challenges exist across the whole Corporation Tax population. Clearer processes, better support and proportionate requirements can help companies avoid mistakes and get things right first time, while protecting revenue and maintaining a level playing field. Future administrative requirements should also integrate more effectively with modern processes and avoid creating unnecessary barriers to growth.

Against this background, the call for evidence considers how Corporation Tax administration could evolve over the longer term to better reflect the different needs and circumstances of companies, and where change could deliver the greatest benefits. It also seeks evidence on the challenges, risks and trade-offs that would need to be considered.

Chapter 2 sets out the strategic context for this work including the commitments made through HMRC’s Transformation Roadmap, and the opportunity to move beyond legacy system replacement.

Chapter 3 presents HMRC’s vision for the future of Corporation Tax administration, centred on helping companies get things right first time, better use of technology and data, more integrated processes and proportionate administration.

Chapter 4 explores how that vision could be delivered in practice, including the role of technology, information flows, agents, digital services and support at key business transition points.

Together, Chapters 2 to 4 are intended to provide a long-term vision for the future of Corporation Tax administration across the whole Corporation Tax population. The government encourages all stakeholders, regardless of size, sector or business model, to consider and comment on these chapters.

Chapter 5 focuses specifically on the needs of smaller companies and entities, and whether there are opportunities to support with the particular challenges they face.

Chapter 6 focuses on larger companies and complex groups and explores how future Corporation Tax administration can better reflect complex business environments.

While Chapters 5 and 6 focus on issues that may be particularly relevant to different parts of the Corporation Tax population, respondents are welcome to comment on either or both chapters where they have relevant experience, expertise or evidence to contribute.

The government welcomes evidence on all aspects of this call for evidence. As it considers how Corporation Tax administration could evolve over the longer term, it is particularly interested in stakeholders’ views on a number of important strategic questions, including:

whether future Corporation Tax administration should better reflect the differing needs, capabilities and circumstances of different parts of the Corporation Tax population
how companies can best be supported at key stages of the Corporation Tax lifecycle, including incorporation, growth and other transition points (HMRC will work closely with The Department for Business, Innovation, Science and Trade on these topics)
how better record keeping, supported by appropriate software, digital tools and guidance, could improve compliance and make it easier for companies to get their tax right first time

Respondents may wish to comment on some or all aspects of the call for evidence and are not required to answer every question.

Question 4

2. Strategic context of this call for evidence

Accepted Answer

The Corporate Tax Roadmap and Transformation Roadmap

The Corporate Tax Roadmap focuses on and sets out the government’s long-term approach to Corporation Tax policy. It aims to provide businesses with the stability and certainty needed to support investment, innovation and growth, while maintaining the UK’s competitiveness as a place to do business. It includes commitments on key features of the Corporation Tax system and provides greater clarity on the government’s future policy direction.

HMRC’s Transformation Roadmap focuses on the future of tax administration. It sets out the government’s vision for a more modern, efficient and automated tax system, making greater use of data, technology and digital services to improve customer experience, reduce unnecessary administration and support compliance. It also highlights the importance of working closely with businesses, agents, software providers and representative organisations to help shape future reform.

As part of this wider transformation agenda, the Transformation Roadmap confirmed that the government does not intend to introduce Making Tax Digital (MTD) for Corporation Tax. Instead, it committed to developing an approach that reflects the diverse needs of the Corporation Tax population and supports modernisation in a way that is proportionate for companies.

This does not mean that the future administration of Corporation Tax should remain unchanged. Advances in technology, software and data continue to create opportunities to modernise the way companies interact with the Corporation Tax system. Rather than adopting the MTD model used in other regimes, the government wants to explore what a future Corporation Tax administration model could look like and how it can best reflect the way companies operate.

This call for evidence builds on the direction of travel set out in the Transformation Roadmap, including ambitions for better use of data and technology, reduced administration and more effective compliance. It also supports HMRC’s Strategic approach to third party software, which recognises the important role software can play in helping customers get their tax right and enabling more seamless interaction between businesses and government. The call for evidence explores what these ambitions could mean in practice for Corporation Tax administration and seeks views on how future reform should be shaped.

The principles explored in the call for evidence also align with the direction of travel set out in the OECD’s Tax Administration 3.0 (TA3.0) model, which envisages tax processes becoming increasingly embedded within the systems and software that businesses already use to manage their affairs.

Legacy system transformation

Corporation Tax has digital filing at its core, with most companies filing returns and accounts electronically. However, the way businesses operate, the technology they use and the opportunities available through data, software and artificial intelligence (AI) have evolved significantly since the current approach was introduced.

HMRC’s underlying Corporation Tax processing platform is approaching the end of its lifecycle and is being modernised as part of HMRC’s wider transformation programme. The first phase of this work is focused on moving legacy technology onto a modernised platform, to ensure it remains secure, resilient and reliable for the future.

This then creates the opportunity to look beyond maintaining the current system and consider what a future Corporation Tax administration model could look like. Rather than simply replicating existing processes on newer technology, the government is interested in whether the system could be redesigned to better reflect how businesses operate, provide more integrated services across government and make effective use of emerging technologies, including agentic AI.

This call for evidence builds on, and sits alongside, wider work across government relating to Corporation Tax administration and company obligations, including:

Modernising and standardising company tax returns — which explores options to standardise the Corporation Tax return and associated information requirements
Reporting company payments to participators — modernising the reporting framework — which considers improvements to reporting requirements for certain types of company payments
the Call for Evidence: Business Systems Integration — which gathers views on the role business systems integration could play in making it easier for businesses to keep records
The Department for Business, Innovation, Science and Trade’s (BIST) Modernising corporate reporting consultation, which seeks views on modernising the UK’s corporate reporting framework, including how reporting obligations could be simplified and made more proportionate, and how digital reporting and communications could be used more widely
working with Companies House and BIST to implement the Economic Crime and Corporate Transparency Act 2023

There are also a number of other related reforms and consultations that may have implications for Companies, including work on third-party reporting, software standards, agent services, international reporting requirements and e-invoicing. While many of these initiatives focus on specific processes, obligations or customer journeys, they raise wider questions about how businesses will interact with government in the future.

Together, these initiatives demonstrate a broader direction of travel towards a more digital, streamlined and integrated approach to tax administration and business reporting. This call for evidence is not intended to duplicate those programmes of work. Instead, it takes a step back and considers what these developments could mean collectively for the future administration of Corporation Tax. The government will consider the evidence gathered through these exercises together as it develops a longer-term vision for a modern, proportionate and effective Corporation Tax administration system.

Question 5

3. HMRC’s Vision for the future of Corporation Tax administration

Accepted Answer

The government believes the future administration of Corporation Tax should be underpinned by a common set of principles focused on making the system clearer and easier for companies to navigate, while supporting businesses to get their tax right. How those principles are applied may need to differ substantially between companies with different business models, levels of complexity and existing systems.

These principles reflect both the challenges seen in the current Corporation Tax system and the opportunities presented by developments in technology. The vision aligns with HMRC’s wider approach to third party software, recognising the important role that commercial software providers can play in supporting compliance, reducing administration and enabling more seamless interaction between businesses and government.

The government is seeking views on whether these principles represent the right direction of travel, and in chapter 4, how they could be delivered in practice. The examples in this chapter are intended to illustrate the sorts of opportunities that a future system might create and help inform discussion. The government welcomes views on these and other approaches that could make Corporation Tax administration easier and more effective.

Principle 1: Helping companies get things right first time

The foundations for compliance are often established long before a company tax return is prepared. The transactions a company carries out, the records it keeps, the systems it uses to manage financial information and the advice it receives can all affect a company’s ability to meet its tax obligations accurately and efficiently. Future administration should place greater emphasis on preventing errors and uncertainty before they arise.

This could be achieved with clearer guidance, better embedded prompts, stronger links between records, accounts and tax and better integration of tax processes into existing finance and business systems. For example, information or prompts provided at the right point could help companies understand what they need to do before an error occurs, rather than having to correct it later. The aim is to make the correct action easier and to support companies in understanding their obligations earlier.

Most companies also rely on agents, advisers and other intermediaries to help manage their tax affairs. A future system should recognise the important role they play and support effective collaboration between companies, agents and HMRC. By helping companies get things right first time, a more preventative approach could improve compliance, reduce uncertainty and minimise unnecessary administration.

Principle 2: A flexible IT platform

A modernised Corporation Tax system should be supported by technology that is secure, resilient and adaptable. As business practices and technology evolve, Corporation Tax administration should be able to grow alongside them while maintaining stability and trust for companies, agents and software providers.

Greater flexibility should be able to support the needs of different parts of the Corporation Tax population, from simpler interactions for some companies to more sophisticated integration with finance, accounting and tax systems for others. It could also make it easier to improve services over time, reduce reliance on outdated processes and support innovation across the wider tax and software ecosystem. A more adaptable system may also help ensure that businesses can interact with HMRC in ways that fit more naturally with how they already run their affairs, including through the software and digital tools they already use. Over time, this will help create a more seamless relationship between HMRC systems, commercial software and wider business processes.

Principle 3: Better integrated information flows

Corporation Tax is closely linked to financial accounting, with taxable profits typically derived from accounting profits, subject to specific adjustments required by tax rules. Companies are generally required to prepare statutory accounts for Companies House and, for tax purposes, use those accounts to support in calculating the taxable profits, pay the tax due and prepare and submit a company tax return, which comprises of the CT600, accounts and tax computations. While this structure provides a clear framework, it can also introduce complexity and duplication.

A more connected approach should allow trusted information to flow more easily between business systems, tax software, agents, HMRC and other government bodies. In line with the government’s aim that businesses should only have to provide information once where possible, we are interested in where requirements could be better aligned across government. For example, the government is interested in whether there are opportunities for information to flow more effectively between HMRC and Companies House, where this could make things easier for companies by reducing the need to provide, reconcile or check similar information more than once. Better connections between systems may also help more businesses embed tax administration within wider business processes rather than needing to treat tax obligations as a separate activity. This could reduce administration and allow businesses to devote more time and resources to their core activities.

Principle 4: Proportionate obligations for different entities

The Corporation Tax population includes a diverse range of entities all undertaking very different activities. Despite their different circumstances, many are subject to broadly similar administrative requirements, and in some cases, entities may perceive current administrative obligations as more extensive than felt necessary.

A future system could take a more proportionate approach, and the government is keen to explore whether some entities might benefit from administrative requirements or processes that better reflect their circumstances. This could, for example, mean simpler routes through the system, reduced reporting requirements or alternative administrative processes. The government is interested in understanding where aspects of Corporation Tax administration could be tailored more effectively to different types of entity in order to make it easier for companies to meet their obligations, while continuing to ensure that HMRC has the information needed to verify that tax obligations are being met.

Any approach would need to recognise that reporting requirements play an important role in preventing abuse, protecting revenue and identifying potential risks. The government is therefore interested in how proportionality can be achieved without undermining appropriate safeguards, oversight or public confidence.

Principle 5: Better use of data and more joined up information

A modern system should provide companies, agents and HMRC with a clearer view of Corporation Tax obligations, payments, claims, repayments, correspondence and other interactions with HMRC. Information should be easier to access, understand and use, helping companies manage their affairs with greater confidence and reducing administrative effort.

The long-term ambition is a system where companies and agents spend less time finding, providing and checking information that government already holds and where government can make better use of trusted data to support both compliance and customer service.

Better use of third-party data should also improve accuracy and reduce opportunities for error. As information becomes more connected and verifiable, data provided by companies could increasingly be checked against other trusted sources, reducing the need for information to be requested, entered or verified multiple times. Over time, this could reduce the need for manual checks, improve confidence in reported information and help ensure that obligations are met accurately.

Reflecting on the vision

The principles described in this chapter are intended to represent the potential long-term direction for the future of Corporation Tax administration. As well as welcoming comments on each individual principle, the government is also interested in stakeholders’ views on how the vision works as a whole, whether it reflects the needs of different parts of the Corporation Tax population, and whether there are important opportunities, risks or considerations that should shape future development.

Question 1: Taken together, do these principles provide the right long-term direction for the future administration of Corporation Tax? Are there any principles you particularly support, disagree with or think are missing?

Question 2: How well do you think this vision would work across the diverse Corporation Tax population, including small companies, larger companies, other entities, agents and software providers? Are there any groups whose circumstances or needs are not adequately reflected?

Question 3: Which of these principles should government prioritise? Which principles are likely to deliver the greatest benefits, or which would be the most difficult to deliver in practice? More broadly, what are your biggest priorities for simplifying Corporation Tax administration, and which changes would make the greatest difference to businesses?

Question 6

4. Enablers for delivering the vision

Accepted Answer

The principles set out in Chapter 3 describe a potential long-term vision for the future administration of Corporation Tax. This chapter explores some of the practical enablers that could support that vision. The government recognises that the diverse population within Corporation Tax may have different needs, capabilities and operating models, and is interested in understanding how these approaches could be implemented in practice, what benefits they could deliver, and what barriers, risks or safeguards would need to be considered.

Technology, software and digital tools

Technology already plays a vital role in Corporation Tax administration. Almost all Company Tax Returns must be filed electronically, with accounts and computations generally submitted in structured electronic formats. Most companies use software throughout the reporting process, whether for record keeping, preparing accounts, tax calculations or filing returns, drawing on a range of tools including accounting and tax software, digital record-keeping systems, bespoke solutions and services provided by agents or specialist providers. However, the extent and sophistication of their use varies across the Corporation Tax population. For some companies, including businesses in sectors such as retail and hospitality, point-of-sale, accounting and tax software may already be closely connected. For these businesses, future reform may involve improving or extending existing arrangements rather than adopting an entirely different model.

Further developments in software, automation and artificial intelligence offer more opportunities to help companies understand their obligations, identify potential errors earlier and reduce manual processes. These technologies could further support more targeted prompts, guidance and automated checks, as well as closer integration between tax, accounting and wider business processes. These opportunities are relevant across the Corporation Tax population, although companies’ needs and capabilities will differ.

Developments such as electronic invoicing for VAT transactions may also provide useful lessons for Corporation Tax as examples of how technology may support record keeping and help businesses maintain more complete and structured information. The government is interested in understanding whether similar approaches could provide opportunities relevant to the future administration of Corporation Tax.

The government recognises that increased reliance on technology also raises important questions around cost, capability, accessibility, transparency, market competition and customer choice. It will be important to consider the safeguards needed to maintain trust and ensure that businesses are not disadvantaged by their ability to adopt new approaches. Continued collaboration between HMRC, software developers, agents, companies and other stakeholders will therefore be central to delivering a modern Corporation Tax system.

Question 4: What technology, software or other tools do you currently use for different stages of the Corporation Tax journey, from record keeping and preparing accounts through to tax calculations and filing returns? To what extent are those tools already integrated?

Question 5: What opportunities are there for software, AI and data-driven services to further help companies meet their Corporation Tax obligations more accurately and efficiently, and what barriers or risks could limit their effectiveness?

Question 6: What risks, limitations or safeguards should government consider if greater use is made of software, automation or AI within HMRC?

Integration and information flows

Companies are already required to prepare and report information for a range of purposes. Most companies prepare statutory accounts for Companies House, use those accounts as the starting point for calculating taxable profits, prepare tax computations to reflect adjustments required by tax law, and submit a Company Tax Return to HMRC. While these processes are closely connected, information often needs to move between different systems, formats and organisations throughout the reporting journey. This can create duplication and increase administration by requiring information to be entered, reconciled or checked multiple times.

A modernised Corporation Tax system could support more seamless movement of information between accounting systems, tax software, agents and HMRC. The aim would be to improve compliance outcomes by reducing duplication and making better use of verified information already captured elsewhere.

A more integrated future system may also create opportunities to reconsider how and when companies interact with the Corporation Tax regime. Under the current model, companies generally pay Corporation Tax before submitting their Company Tax Return, reflecting a process in which information is prepared, reconciled and reported at different stages. While this approach can provide time for companies to prepare accounts, calculate taxable profits and manage cash flow, it was developed in a very different technological environment. As information becomes more connected and available, the government is interested in understanding whether the current filing and payment deadlines continue to strike the right balance between giving companies sufficient time to meet their obligations and encouraging timely engagement with the Corporation Tax system.

Question 7: Where does the greatest administrative complexity or burden arise in meeting Corporation Tax obligations? How could processes be simplified and are there opportunities to better align accounting and tax filing processes?

Question 8: Is the information currently required by HMRC for Corporation Tax purposes appropriate? As information becomes more integrated and available, are there opportunities to simplify or better align requirements with other reporting requirements, such as Companies House, reduce duplication, make better use of information already held by government or collect information in different ways?

Question 9: What opportunities, risks or safeguards should government consider if information flows more seamlessly between accounting systems, tax software, agents, HMRC and other organisations? In particular, are there concerns around data quality, security, privacy and governance?

Question 10: As information becomes more integrated and available, will the existing Corporation Tax filing and payment timelines remain appropriate? What benefits, risks or trade-offs could arise from alternative approaches?

Agents and advisers

Agents, accountants, tax advisers, bookkeepers and other intermediaries play an important role in Corporation Tax administration. Many companies rely on professional support to understand their obligations, prepare returns, manage compliance and interact with HMRC.

The role agents play varies across the Corporation Tax population. Some smaller or newer companies may depend heavily on external advisers, whilst others may utilise internal tax teams, specialist advisers, consultants and auditors. For some, agents act as their primary interface with the Corporation Tax system highlighting the importance of needing to reflect a range of operating models and relationships in any future administrative system.

The effective involvement of agents and advisers will be important for delivering many of the principles set out in Chapter 3, including helping companies get things right first time, improving access to information and making better use of data and technology. Their experience of supporting clients across different sectors, sizes and structures also provides valuable insight into how the Corporation Tax system operates in practice. Views are therefore sought on how future services, systems and processes should support the needs of both agents and the organisations they represent.

Question 11: What aspects of current Corporation Tax administration work well for agents and advisers, and where do the greatest challenges arise?

Question 12: What services, information or functionality would be most valuable to agents from a modernised Corporation Tax system, including when accessing information or acting on behalf of clients?

Access, information and communications

Companies and agents interact with HMRC throughout the Corporation Tax journey not just when preparing accounts, filing returns and paying tax. They may need to make claims, elections, amendments, repayment requests and make other submissions. They may also need HMRC to make a decision, process a repayment or respond to a query before they can move forward. The timeliness and clarity of these interactions can therefore be important to businesses. These interactions are also often spread across different services and communication channels, which can make it difficult to manage Corporation Tax obligations efficiently.

A future Corporation Tax system should make it easier for companies and agents to understand their position, access relevant information and interact securely with HMRC. This could mean a clearer view of their Corporation Tax position, including obligations, payments and claims, alongside more effective digital communication and reduced reliance on paper-based processes. The aim is to provide a more joined-up experience across the Corporation Tax lifecycle, helping companies stay on track and resolve issues more easily.

Trust and security will be an important part of this future model. Internationally, countries, such as Estonia, use digital identity to support secure interactions between businesses, individuals and government services. There are also related developments in the UK, including Companies House reforms introducing identity verification requirements for company directors and People with Significant Control (PSCs), intended to improve confidence in who is acting on behalf of a company. These developments highlight opportunities to strengthen trust, improve traceability across systems and support more secure digital interactions. The government is interested in understanding whether similar approaches could play a greater role in the future administration of Corporation Tax, and what challenges or risks would need to be considered.

Question 13: How easy or difficult is it currently for companies and agents to access and understand their Corporation Tax information, obligations and interactions with HMRC? What are the main difficulties?

Question 14: What challenges do companies and agents experience when they require a response or decision from HMRC as part of managing their Corporation Tax affairs, including in relation to claims or repayments? What changes could improve these processes?

Question 15: What information, services or functionality would be most valuable if companies and agents could access their Corporation Tax affairs through a more joined-up and secure service?

Question 16: What opportunities, risks or lessons from the UK or other countries should government consider when developing future Corporation Tax services, including approaches to digital identity, access to information and secure interactions with government?

Business growth and transition points

As companies grow and evolve, their Corporation Tax obligations, reporting requirements and administrative needs can change significantly. For many smaller businesses, VAT registration is a significant milestone. For others, key transition points may include taking on employees, expanding internationally, acquiring other businesses or moving to a more complex group structure. These developments can create important transition points where new obligations, systems or reporting requirements need to be understood and adopted.

A future Corporation Tax system should support companies navigate these transition points by providing appropriate support, guidance and services that can help them adapt as their needs evolve. The government is interested in understanding where companies currently face challenges and whether there are points at which administrative requirements create unnecessary friction or barriers to growth.

The government also recognises that different approaches for different parts of the Corporation Tax population may create unintended consequences if not designed carefully. For example, simplified processes designed for smaller companies could create cliff edges, distortions or disincentives to growth if transitions between regimes are not managed effectively. The government is interested in understanding how a future Corporation Tax system can support companies as they grow while maintaining simplicity, fairness and confidence in the wider tax system.

Question 17: What administrative challenges arise as companies grow or invest? At which points in the business lifecycle do they occur, and what support would be most valuable? Where possible, please provide examples of where Corporation Tax administration has delayed or discouraged investment, and which changes could have the greatest benefit.

Question 18: What risks, costs or unintended consequences should government consider if different administrative approaches were to apply to different parts of the Corporation Tax population? In particular, are there any thresholds, reporting requirements or changes in obligations that could create cliff edges, distortions or disincentives to growth?

Question 7

5. Smaller companies and entities

Accepted Answer

Small and micro companies and entities make up a significant proportion of the Corporation Tax population and are an important part of the UK economy. They are also highly diverse, ranging from newly incorporated companies with limited activity to more established companies wanting to grow. The implications of Corporation Tax modernisation will therefore differ across the small company population. For some companies, the future model may build on systems and processes already in place, while for others, particularly some nano and micro companies, it could represent a much more significant change.

Many small companies have limited time and administrative capacity and may face particular challenges navigating Corporation Tax alongside the wider demands of running a company. These challenges can include having limited tax and accounting expertise, reliance on manual processes, difficulty accessing timely and affordable support and navigating the complexity of the tax system and associated administrative requirements. Difficulties can arise in areas such as record keeping, reporting income, understanding the treatment of expenses and maintaining accurate information throughout the year. While the causes of non-compliance are varied, there may be opportunities to improve compliance outcomes and reduce administration by making it easier for companies to get things right first time.

The tax gap for small business Corporation Tax was estimated at £17.3 billion in 2024 to 2025, equivalent to 44.6% of the theoretical small business Corporation Tax liability. Addressing this gap is important for protecting revenue and supporting fairness, but it must be approached in a way that recognises that most companies want to comply and may need clearer processes, better tools and more timely support to do so.

The government is committed to supporting small businesses to start, grow, and succeed. For many small companies, time spent navigating tax administration is time that cannot be spent running and growing the business. A future Corporation Tax system should aim to provide greater clarity, reduce unnecessary administrative effort and make it easier for small companies to understand and meet their obligations. This chapter explores the specific challenges and opportunities facing small companies and seeks views on how future Corporation Tax administration could better support compliance, reduce administration and better support their growth and development.

Incorporation and the early lifecycle

Incorporation is an important decision for many businesses and marks the start of their Corporation Tax journey. Each year, large numbers of new businesses are created in the UK, and many will choose to operate through a company structure. Incorporation can affect a business’s tax obligations, reporting requirements, legal responsibilities and interactions with government. Understanding how and why these decisions are made is therefore important when considering the future administration of Corporation Tax.

Differences in tax treatment, reporting requirements and administrative obligations between incorporated and unincorporated businesses may all influence decisions about whether to operate through a company structure. The government would like to better understand the factors that shape these decisions and whether businesses have access to the information and support they need to make informed choices.

Once incorporated, companies can experience a significant gap of up to 21 months between incorporation and the first Corporation Tax filing or payment obligations. For example, a company who incorporated on 1 February 2026 may prepare its first set of accounts for the year ending 31 January 2027. Any Corporation Tax due would normally be payable by 1 November 2027, with the Company Tax return due by 31 January 2028. While this can provide time for a company to establish itself, it also raises wider questions about how and when businesses engage with the Corporation Tax system during their lifecycle. Earlier and more effective engagement could help companies understand their obligations, reliefs, allowances and available support, establish good administrative practices and avoid errors or unexpected liabilities as they grow.

Some newly incorporated companies may also find it difficult to navigate specific administrative challenges that can arise early in a company’s journey. This can include early filing obligations and situations where a company’s first set of accounts covers a different period from its Corporation Tax reporting obligations. For example, some newly incorporated companies may need to submit 2 Company Tax Returns to HMRC for their first period of account. This is because Company Tax returns can only cover a maximum of 12 months, even where the first set of accounts for Companies House covers a longer period by default. Because these challenges sit across both the tax and company law frameworks, HMRC and the Department for Business, Innovation, Science and Trade will continue to work together to understand how unnecessary burdens arise and explore opportunities to improve the experience for newly incorporated companies.

Question 19: To what extent do differences in tax treatment, reporting requirements and administrative obligations influence decisions to incorporate? Are there aspects of the current tax system and administrative framework that encourage or discourage incorporation?

Question 20: What information, support or guidance would help companies make more informed decisions about whether to incorporate?

Question 21: What challenges, if any, arise from the period between incorporation and a company’s first Corporation Tax obligations?

Question 22: What changes to Corporation Tax administration could help newly incorporated companies better understand their obligations, reduce errors and engage more effectively with the tax system from the outset?

Supporting compliance and reducing error

Most companies want to get their tax right and meet their obligations. However, understanding and applying Corporation Tax requirements can be challenging, particularly for smaller companies that may have limited access to specialist support or dedicated finance expertise.

Evidence from compliance activity suggests that issues relating to income reporting and the treatment of expenses are important contributors to errors amongst the small business population. Challenges can also arise where business and personal finances are not clearly separated, or where information is incomplete, inconsistent or unavailable when needed. The government is interested in understanding whether there are opportunities to reduce complexity in these areas and improve compliance outcomes.

The government’s vision for a modernised Corporation Tax system includes a greater focus on helping companies to prevent errors before they occur. For small companies in particular, these changes could create opportunities to reduce administration, improve certainty and help companies get things right first time. The government wants to understand the barriers small companies currently face in meeting their Corporation Tax obligations, and whether compliance outcomes could be improved through simplification, clearer guidance, more timely support or other practical changes that help companies meet their obligations with greater confidence.

Question 23: What are the main challenges small companies face in meeting their Corporation Tax obligations? Where in the business lifecycle do they arise and which aspects of Corporation Tax most commonly lead to errors or inaccuracies?

Question 24: Which aspects of reporting income, treatment of expenses, calculating taxable profits and maintaining a separation between business and personal finances are difficult to understand or apply in practice? What would make these processes easier to get right?

Question 25: How could Corporation Tax administration guidance and support, be improved to help small companies meet their obligations more accurately and efficiently?

Digital tools and record keeping

Good record keeping provides the foundation for meeting Corporation Tax obligations. Maintaining accurate and timely information helps companies prepare accounts, calculate tax liabilities and submit the information required by HMRC. It can also support wider business objectives by helping companies understand their financial position, make informed decisions and manage cash flow.

Many companies already use digital tools such as accounting software, digital record keeping tools and functionalities within business bank accounts to support these activities. These tools can reduce manual processes, improve accuracy and make it easier to maintain consistent information across records, accounts and Company tax returns.

However, small companies vary considerably in the tools and systems they use. Some rely on integrated software and digital services, while others use spreadsheets, manual processes or a combination of different products. The nature of future change will therefore differ. For some companies it may involve making better use of systems already in place; for others, particularly some nano and micro companies, adopting integrated digital processes could represent a much more significant transition. Barriers to adoption may include cost, capability, confidence, access to suitable products or uncertainty about the benefits. The government is interested in understanding both the experiences of companies already using digital tools and the challenges faced by those who are not.

Technology is likely to play an increasingly important role in the future administration of Corporation Tax. Advances in software, automation and artificial intelligence may create opportunities to improve record keeping, reduce manual activity and support more integrated approaches to managing tax obligations. For example, future tools could help businesses maintain records, identify inconsistencies, automate routine processes or provide more personalised assistance through services such as a digital business tax assistant. The government is interested in understanding how these technologies could support small companies and what safeguards may be needed to ensure accuracy, transparency and trust.

Question 26: How do small companies currently maintain records and the information needed for Corporation Tax purposes? What is the role of accounting software and digital record-keeping tools? What approaches work well, and what challenges do companies face?

Question 27: What role could software, automation, artificial intelligence or services such as a digital business tax assistant play in supporting Corporation Tax administration for small companies? What safeguards should be considered to ensure accuracy, transparency and confidence in the outputs they produce?

Question 28: What factors most influence decisions about whether to adopt accounting software, digital record-keeping tools, automation or AI-enabled services? What opportunities, risks or concerns do companies associate with these technologies, and what role, if any, could government play in supporting their use?

Question 29: What role could business bank accounts play in supporting record keeping and improving compliance?

Simplification and tailored approaches for small companies

The government recognises that a Corporation Tax system designed to accommodate a wide range of business types needs to work effectively for companies with very different circumstances and administrative needs. While a common framework provides consistency and fairness, a future Corporation Tax system may also need to recognise that a single approach may not be appropriate in all circumstances.

One of the questions this call for evidence seeks to explore is whether there are opportunities to make administrative processes simpler and more tailored for parts of the small company population. Simpler administration does not necessarily mean collecting less information or weakening safeguards. It could involve different customer journeys, alternative administrative processes, better use of existing information or more tailored services or approaches. The aim should be to make it easier for companies to meet their obligations, reduce unnecessary administrative effort and support growth, while protecting revenue and maintaining a level playing field.

Internationally, some governments have adopted different administrative approaches for particular categories of business based on factors such as size, turnover or business activity. In some cases, this includes simplified reporting processes or more integrated administrative arrangements. For example, in Brazil, eligible small businesses can benefit from a simplified administrative regime that consolidates reporting requirements and reduces compliance burdens. The government is interested in understanding whether lessons from these and other approaches could inform the future administration of Corporation Tax in the UK.

Question 30: Are there opportunities to introduce tailored approaches to Corporation Tax administration for certain small companies? If so, what aspects of administration could be tailored, what benefits or risks might arise? How could eligibility be determined without creating unfairness, complexity or barriers to growth (such as turnover, activity, balance sheet, number of employees)?

Question 31: What lessons, if any, can be learned from international approaches to simplified taxation and reporting for micro and small businesses? Are there features of these approaches that could improve compliance, reduce administration or support growth in the UK?

Other entities within the Corporation Tax population

While this chapter focuses primarily on small companies, the Corporation Tax population also includes a range of other entities with distinctive administrative needs, including charities, CASCs, public bodies and certain unincorporated associations.

These organisations can face challenges that differ from those experienced by commercial companies. For example, charities and public bodies may need to meet multiple reporting obligations across different regulators and government bodies, while organisations with limited tax expertise may face challenges understanding and applying Corporation Tax requirements.

The government is interested in understanding whether there are opportunities to reduce unnecessary administration, improve guidance and support, better align reporting requirements, and ensure that future changes to Corporation Tax administration reflect the needs of the full range of entities within the Corporation Tax population.

Question 32: For charities, CASCs, public bodies and other entities with specialist tax treatment, what Corporation Tax administrative requirements are most onerous? Are there opportunities to reduce duplication with other reporting requirements or improve guidance and support?

Question 8

6. Larger companies and complex groups

Accepted Answer

Larger companies and complex groups play a critical role in the UK economy and represent a significant proportion of Corporation Tax receipts. They are also highly diverse, ranging from large domestic groups to multinational enterprises operating across multiple jurisdictions.

Many already use sophisticated accounting, finance and tax systems and have established governance and assurance processes for managing tax obligations. Their Corporation Tax administrative challenges may arise not from a lack of technology, but from the scale and complexity of their operations, including organisational structures, international activity, legal interpretation, the movement of data and major business or systems change. Complexity may also arise as companies expand and evolve, including when medium-sized companies become larger or when companies undertake significant acquisitions or restructurings, enter new markets, or implement major changes to their systems and operating models.

This call for evidence takes a long-term view of Corporation Tax administration and is focused on the future direction of travel rather than individual reforms currently under development. Existing and planned reforms form part of the wider programme of modernisation, helping to build the foundations for future approaches that simplify administration, improve compliance and better reflect the way businesses operate. This chapter explores how the wider vision set out in this call for evidence could apply in these environments. It seeks evidence on how future Corporation Tax administration could build on existing business capabilities, improve certainty and compliance, reduce unnecessary duplication and better reflect the way large companies and complex groups operate.

Operating across complex structures and jurisdictions

Larger companies may be required to manage Corporation Tax obligations alongside transfer pricing requirements, international reporting obligations, group governance arrangements and wider financial reporting requirements. They may also need to manage information and processes across multiple legal entities, business units, systems and jurisdictions.

Many organisations already operate in highly integrated and automated environments. However, administrative complexity can still arise where information needs to move between different systems, reporting frameworks and organisations, or where companies must reconcile different obligations and requirements. Complexity may arise from international activities, organisational structures, the interaction between different reporting obligations, the design of systems and processes, or the quality and flow of information across an organisation.

While many of the themes explored throughout this call for evidence are relevant across the Corporation Tax population, the government is particularly interested in understanding the challenges and opportunities that arise because of the scale, complexity and international nature of large companies and complex groups. This includes understanding where administrative complexity and duplication arise in practice, whether these challenges differ from those experienced elsewhere in the Corporation Tax population, and whether there are opportunities to better align Corporation Tax administration with the systems, structures and reporting requirements typically used by large companies and complex groups.

Question 33: What are the most significant Corporation Tax administration challenges faced by large companies and complex groups? Which of these challenges arise because of the scale, complexity, structure or international nature of their operations?

Question 34: Are there opportunities to reduce administration for large companies and complex groups by improving how Corporation Tax requirements interact with other reporting obligations, business systems and sources of information? If so, what changes would deliver the greatest benefits?

Question 35: Are there examples of approaches used in other jurisdictions that help large companies manage Corporation Tax or wider business reporting requirements more effectively? What lessons could be applied in the UK?

Technology, AI and integrated business systems

Large companies and complex groups often rely on sophisticated finance, accounting, tax and reporting systems to manage obligations across multiple entities, jurisdictions and business activities. Technology, automation and artificial intelligence are increasingly embedded within these environments and are often used to support compliance, governance, risk management and decision making.

The government is interested in understanding how future Corporation Tax administration could build on these existing capabilities and better align with the systems, processes and operating models already used by large companies and complex groups. This includes understanding where current approaches create friction, duplication or require manual intervention, and where more effective integration could improve administrative efficiency and compliance outcomes.

Question 36: How are large companies currently using software, automation, AI and integrated business systems in relation to Corporation Tax administration? What approaches work well, what challenges do organisations face, and what barriers prevent wider adoption or use of these technologies?

Question 37: What barriers prevent greater use of integrated systems, automation or artificial intelligence, and how could these barriers be addressed?

Question 38: How could future Corporation Tax administration better align with the finance, accounting, tax, and governance systems already used by large companies? What opportunities or challenges should government consider?

Question 39: What lessons can government learn from the use of software, automation, AI and integrated business systems within large companies, and what safeguards, controls or support may be needed to enable their effective use in Corporation Tax administration?

Growth and organisational change

As business grows and evolves, the administrative arrangements often become more complex. This may arise from organisational growth, acquisitions, international expansion, additional reporting requirements and the adoption of more sophisticated governance and control frameworks.

These changes can create important transition points where systems, processes and governance arrangements are redesigned or integrated. They may also create new Corporation Tax administration challenges as companies adapt to changing organisational structures, operating models and reporting requirements.

The government is interested in understanding how Corporation Tax administration can better support these transition points, including where companies move from medium-sized organisations to larger and more complex groups.

Question 40: What administrative challenges arise during major organisational, systems or business transformation programmes, such as acquisitions, restructurings, finance transformation or enterprise system implementation?

Question 41: What support, services or changes to Corporation Tax administration would help companies navigate these transition points more effectively?

Question 9

7. Next steps

Accepted Answer

The government will consider responses to this call for evidence to:

identify priority areas for reform
inform the design of future policy options
determine whether further consultation is required

The government is committed to working collaboratively with stakeholders to shape the future of Corporation Tax administration and will work closely with BIST and Companies House, where topics overlap.

This call for evidence also complements the government’s recent consultation on Modernising and Standardising Company Tax Returns. Feedback from stakeholders highlighted the importance of balancing opportunities to improve data quality, standardisation and administration with the need to minimise unnecessary burdens and reflect the differing needs of the Corporation Tax population. The government will consider the evidence gathered through both exercises together as it develops a longer-term vision for a modern, proportionate and effective Corporation Tax administration system.

After the call for evidence has closed, the government will publish a document summarising the responses received and setting out the action it will take as a result.

Question 10

8. Assessment of impacts

Accepted Answer

Summary of impacts

Year	2022 to 2023	2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028
Exchequer impact (£m)	Not applicable	Not applicable	Not applicable	Not applicable	Not applicable	Not applicable

Exchequer Impact Assessment

Publication of the call for evidence has no Exchequer impact. Any Exchequer impact will be estimated following consultation, final scope and design, and will be subject to scrutiny by the Office for Budget Responsibility.

Question 11

9. Summary of consultation questions