Reporting company payments to participators — modernising the reporting framework — Summary of responses
Updated 28 October 2026
© Crown copyright 2026
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This publication is available at https://www.gov.uk/government/consultations/reporting-company-payments-to-participators/outcome/reporting-company-payments-to-participators-modernising-the-reporting-framework-summary-of-responses
1. Executive Summary
The consultation Reporting company payments to participators — modernising the reporting framework ran from 19 March to 10 June 2026. The government is grateful to all who responded.
The consultation set out proposals to mandate more detailed reporting of transactions between close companies and their participators (broadly, shareholders). Better data would both aid in more targeted compliance by HMRC and build good habits in small businesses around recognition and tracking of the legal separation of the company and its shareholders.
This consultation forms part of the government’s work to close the tax gap, which for small companies stands at £17.3 billion in absolute terms for the 2024 to 2025 tax year.
The responses from the smallest businesses and their advisers painted a strong picture of a lack of understanding and compliance with the current rules. Views on the proposed new reporting demonstrated that keeping track of money taken from the company was often itself seen as new, rather than part of their current tax obligations.
Guidance for small companies and their owners was seen to be fragmented and difficult to engage with. More timely education for key decision points was suggested, as well as online videos and plain language guidance. HMRC recognises that more needs to be done to support business owners and bring them up to the level of understanding necessary to allow them to comply with their existing obligations.
Other difficulties were noted for larger businesses and certain collective investment vehicles relating to the scale of the requirement. These respondents and their advisers felt that while they fell within the close company definition, the risks the measure seeks to address were already mitigated by stronger governance.
2. Summary of responses
HMRC received 1,001 written responses in total, which can be broken down as follows:
- 579 businesses
- 184 individuals
- 169 agents
- 18 representative bodies
- 51 other or unknown
Respondents are listed in Annex A.
A small number of round table meetings were also held with a variety of interested parties.
The majority of respondents were negative about the proposals on the grounds of increased costs and burdens. Advisers who responded were generally positive, seeing encouragement to better record keeping as an aid to tax compliance.
Understanding of the existing rules
Nearly all respondents stated that the close company definition, obligations on Directors Loan Accounts, and general terms (for example ‘participator’) were not well understood. Understanding is much stronger among professional advisers.
Beyond the terminology, the responses also made it clear that a significant number of small companies did not recognise that there are tax consequences to the owners of a company taking money from it, or that they should already keep records of transactions between themselves and the company.
This lack of understanding can lead to non-compliance, particularly for businesses without professional representation. It would also make it more difficult to comply with any new reporting requirements, with some companies unable to understand which entities and transactions are in scope.
Guidance and support
Respondents used a range of support including software, professional bodies and online guidance (both from HMRC and other sources). Many respondents felt that the guidance in this area is fragmented, overly technical and hard to navigate. This was a broad theme across the consultation, even when not directly related to the question.
Respondents suggested guidance should be simple, proactive and accessible including:
- earlier educational material to be sent to small businesses when they register
- adjusting guidance to plain language and using simpler terms
- accessible online training, including videos and webinars
Several responses highlighted that direct support from HMRC was difficult to access. There was some positive feedback that it was good quality once accessed.
The majority of respondent companies engage an adviser to support their tax affairs. The level of support varied, with some only seeking advice at year end on specific issues.
Respondents generally felt that the increased reporting proposed would mean more reliance on advisers, particularly if the reporting was more than annual.
Record keeping and data on participators
Responses show that approaches to record keeping varied significantly in terms of attention to, and level of, detail. Very small company respondents generally did not look at their records until near their accounting and tax filing deadlines.
Most companies use online accounting software and there is a heavy reliance on accountants to maintain the accounts.
The majority of advisers highlighted widespread issues with tax compliance, including poorly organised records, late provision of records near the filing deadline, and a lack of understanding of the rules. Respondents in this area were positive about anything that could encourage earlier engagement and more accurate record-keeping.
A small number of respondents identified potential difficulties obtaining identifying information for persons who may fall within the definition of close company participator but were distant from the business. Examples included participators who are not employees, those based overseas, or where there are complex trust, estate, nominee, corporate, or collective investment arrangements.
Administration of a new requirement
The majority of respondents raised concerns about the increased administrative burdens and costs for taxpayers, including increased advisory fees. In many cases the proposed new obligations were conflated with existing ones.
Responses focussed on reducing duplication and the subsequent time burden on small companies, including support for integrating any new reporting requirements into the existing annual Company Tax Return process through expansion of existing third-party software, and for excluding information already reported elsewhere.
There was general support for annual reporting rather than more frequent, and summary-level reporting rather than transaction-by-transaction. Some respondents suggested a reporting threshold, or a focus on non-routine or ‘higher-risk’ transactions.
Most respondents did not object to using the existing Corporation Tax penalty framework, but proportionate implementation was a concern. There were recommendations for a grace period at the beginning, extensive guidance before implementation and focussing penalties on repeated or intentional failures.
Most tax professional and academic bodies expressed the view that the new data collected could in some circumstances reduce the burden on compliant customers by limiting the instance of unwarranted enquiries based on poor data.
Scope and coverage
Several respondents felt that the impact on medium and large companies and collective investment vehicles would be disproportionate given the scale of what would be required in their circumstances, and that poor record keeping was not felt to be a risk. Those respondents suggested restricting requirements to small companies or excluding entities already subject to significant regulatory oversight.
Specific points were also raised around excluding companies in administration or liquidation and ensuring that existing exemptions to loans to participators should continue to apply.
3. Next steps
The government will not implement the new reporting requirements at this time. The consultation responses demonstrated that companies are struggling to meet their existing reporting obligations. More consideration needs to be given to embedding fundamental tax obligations in the smallest companies before increased reporting is further considered.
The government recognises the importance of a fair and simple tax system, where people pay what they owe and understand their obligations. Whilst there is a clear imperative to take steps to increase compliance in small companies, the government is also mindful that further consideration of the options will be required to ensure that additional burdens are proportionate and staged.
The government will keep in mind the messages learned from the consultation as it continues to review Corporation Tax reporting more generally through the call for evidence on Modernising the Administration of Corporation Tax.
Existing support
HMRC is building up the range of accessible and simple tax guidance on GOV.UK.
This includes first-steps tax guidance in Tax Confident. There are also videos and information on How to Choose a Business Structure and decide whether a company is the right choice. And for small companies, the basics of Corporation Tax, including that taking money out of a company means paying tax.
The guidance is designed to help new businesses make decisions and understand the basics of their tax obligations. It also links to the more detailed GOV.UK guidance, much of which is also written in plain language.
Annex A: List of stakeholders consulted
Organisations that responded
The following organisations submitted responses to the consultation.
In addition to those listed below, 726 responses were received from sole traders, individuals, or businesses who chose not to have their name published.
| 2 Sisters Accounting |
| ACCA (the Association of Chartered Certified Accountants) |
| Acumen Accounting |
| Adorned piercing and jewellery Ltd |
| Advanced TRS UK Ltd |
| Aegon Solutions Ltd |
| Albert Goodman LLP |
| Allium Accountancy Ltd |
| Alvarez & Marsal Tax LLP |
| Ander Tax Ltd |
| AnthrOrg Ltd |
| Archer Six Ltd |
| Association of Accounting Technicians |
| Association of Taxation Technicians |
| Atharra Limited |
| AW Landscape Design Company Ltd |
| AXIOM PT LTD |
| BAD PRESS iNK Ltd |
| Bailey & Palumbo LTD |
| Bark & Bake Treats |
| Baronway Housing Solutions |
| BASDA (The Business Application Software Developers Association) |
| BBeM Ltd |
| BCA Accountants |
| Bea Wellness |
| Beautiful Minds Consulting Ltd |
| Bee Luxx Candles |
| Beeston-Clarke Accountants Ltd |
| Blomma Beauty |
| Bonte trading company limited |
| Breakthrough Psychological Services ltd |
| BristolCarMarket |
| Broadcast.Works Limited |
| Brogan BusinessDevelopment Services Limited |
| Burnett’s House Ltd |
| Business and Technical Services Ltd |
| Cameron Baum Hollander Chartered Accountants |
| Carter Electrical |
| Centre for the Analysis of Taxation |
| Chapter |
| Charlie Clarey Ltd |
| Charnwood Accountants and Business Advisors LLP |
| Chartered Accountants Ireland |
| Chartered Institute of Taxation |
| Chef at Hand |
| Chris Harrison Contractors Ltd |
| Churchgate Accountants Limited |
| CirculAIRity Ltd |
| Clarity Canine Education |
| Cleary Gottlieb Steen & Hamilton LLP |
| Coach Logistics Ltd |
| Connecting rainbows |
| Conor Kenny Prime Getaways Ltd |
| Cooper Faure Limited |
| Coote O’Grady Ltd |
| Cornershop Coffee Ltd |
| Country Land and Business Association |
| CPB Law Ltd |
| Craft and Canvas Ltd |
| CRMN Tech LTD |
| Crowe U.K. LLP |
| CT Baker Group Ltd |
| Custom Wheels Ldn |
| CVS enterprise limited |
| Cybershelter Ltd. |
| DAC ltd |
| De’Cage Psychology Ltd. |
| Deloitte LLP. |
| Digital Seamstress |
| Dinsdale Young Consultants Ltd |
| Divelements Limited |
| DJB Accounting. |
| Dorwest Herbs Limited |
| Drummonds Property |
| DXD Accounting Limited |
| E Toon |
| Eastbloom limited |
| Ecotreat Ltd |
| Edge of the World Ltd |
| Elbow Sports Massage Ltd |
| Endeavour360 Ltd. |
| Enebio Ltd |
| Enterpex Limited |
| Enviro-Cap Ltd |
| Equilibria recovery and performance |
| Fairstead Estates |
| Federation of Small Businesses |
| Fisherton consulting |
| Florals of Splendour |
| Flying Penguin Holdings Limited |
| Forvis Mazars |
| Fractional / Talent Associates Limited |
| Freshfields LLP |
| FTI Consulting |
| Georgia Turner Communications Ltd |
| Get Fed Coffee CIc |
| GF Property And Development Limited |
| Ghost Sloth Limited |
| Gibbsoft Ltd |
| Gold Stag Accounts Ltd |
| Goringe Accountants |
| Grady Developments |
| Grand innovations Surrey ltd |
| Grant Thornton UK Advisory & Tax LLP |
| Grantabridge Research Limited |
| Grasp Accountants |
| Green & Moore Accountancy Ltd |
| GSE Holdings Limited |
| Gwynt y Ddraig Cider Ltd |
| Hadspen Quarry |
| HallComm Ltd |
| Hansen Company |
| Happy Feet Happy Mind Ltd |
| Head and short podiatrists ltd |
| Heathwood Business Services Ltf |
| Heelan Associates Ltd |
| Hennaboy |
| Henry Gale Associates Ltd |
| HN Communications Ltd |
| Holy Crepe! Ltd |
| HONORIFIC LTD |
| ICAEW |
| Independent Garage Association (IGA) |
| Indigo Support Solutions Ltd |
| Infinity Accounts Limited |
| Ingham & Co Chartered Accountants |
| Inkfire Limited |
| Inspired Accountants Limited |
| Interface Force Measurements |
| ITSS Limited |
| J & A Deer Management Ltd |
| J R Banks Ltd |
| James Place Adult Daycare |
| Jane Simpson Access Ltd |
| JLK Accounting Limited |
| Jones and sons Autocentre Ltd |
| JYM Properties Ltd |
| KEW Accountants & Tax Specialists Ltd |
| Kingston Accountants LTd |
| Kingstone Coaching and Training |
| Kitch International Ltd |
| KNR Consulting Ltd |
| KPMG LLP |
| Landau Land Limited |
| Landscape Connection (UK) Ltd |
| Laura Cockbain Ltd |
| LilyIris Accounting Ltd |
| Livingston Dental Healthcare Ltd. |
| Loam Developments |
| Love Design Ltd |
| Lynchpin Media Limited |
| M & C Farrell Limited |
| M.A.M.A’S FAMILY FOOD |
| Macfarlanes LLP |
| Maglia Rosa Consulting Ltd |
| Margaret’s ecology Ltd |
| Marmalade Hive Ltd |
| Marston Court management company |
| Mcintosh Shepherd Ltd |
| Melt Productions Ltd |
| MHA Advisory Limited |
| Money Tree Fundraising |
| Moore Kingston Smith LLP |
| MOScomms Limited |
| Ncmedia ltd |
| New Make Comms |
| NICE GUYS LTD |
| Nick Collins-Green |
| Nix Hair & Beauty |
| NO.8 LABS LTD (Number Eight Labs Limited) |
| Nohma Ltd |
| Northern Sports & Welbeing |
| Northwood (Assets) Ltd |
| N-Phonic Limited |
| Octopoda Consult Limited |
| Ode&Ettle Ltd |
| Oldfield Advisory |
| ŌMnipotential movement wellness massage |
| On The Spot Accountants |
| Organic Herbal Remedies Ltd |
| Outsourced Accountancy Ltd. |
| P3MG Consulting Ltd |
| Pana Property Investments Ltd |
| Panthera Accounting |
| Parmiter Engineering LTD |
| Paul Elswood Consulting Limited |
| Pawfectly Clean Cymru |
| PBM Real Estate Consultancy Ltd |
| Pckernow Ltd |
| Perdl Limites |
| Pillow May Ltd |
| Pip Creative Ltd |
| PKF Francis Clark |
| Place & Purpose Studio |
| Popcorn |
| Proactive Accounting |
| Professional Energy Services Ltd |
| Psychic Salon Ents |
| PureMed aesthetics |
| PwC LLP |
| PWSCE Limited |
| Queen Bee Honey & Cosmetics |
| R&E Alchemy Ltd |
| Radiant Wisdom Enterprise Ltd |
| Rebellio Limited |
| Regulation Management Limited |
| RFS Marketing & Communications Ltd |
| Rhino Safety Limited |
| Ri.Makes Ltd |
| Riddington Cook Limited |
| Riduna Holdings ltd |
| Robert Neill Director Neill Wine Ltd |
| Robyn Inc Limited |
| RSM |
| S&W LLP |
| Saffery LLP |
| Salt & Gorse Ltd |
| Sandy Brown Ltd |
| Sapphire Business Services (Banbury) Ltd |
| Scholes Chartered Accountants |
| Scottish Land and Estates |
| Seekr Ventures |
| Shareway Limited |
| SHLEE Limited |
| Shoosmiths LLP |
| Shore & family property |
| Showcase Media |
| Simmons & Simmons LLP |
| SJSOptical Limited |
| Skate Cabal Ltd |
| SMS Advisory Limited |
| Snapdragon Edinburgh Limited |
| STNR UK LTD |
| Storage24 Ltd |
| Streets Chartered Accountants |
| Swift Accountancy |
| Swimrite school of swimming |
| Tailored Accountancy Ltd |
| Talent wise consulting |
| Taylored Bids and Consulting Limited |
| Taylor-Made Accountancy Ltd |
| Thames Williams Limited |
| The Curtis Partnership |
| The French Marketer Ltd |
| The George Inn at Newnham |
| The Happiness Hub Derby CIC |
| The Happy Blossoms Floral Design Limited |
| The Hatchery Business Technologies |
| The Helaina B&B and Apartments |
| The Institute of Chartered Accountants of Scotland (‘ICAS’) |
| The Law Society |
| The Living Room |
| The orchard surgery |
| The Pickled Fox Ltd |
| The PR Set |
| Therapy By Emma |
| Thirty 2 Ltd |
| Transfer Pricing Solutions Limited |
| Translator Supermarket |
| Transfer Pricing Solutions Limited |
| Translator Supermarket |
| Travers Smith LLP |
| trinova accounting |
| Twentyman Talks Ltd |
| UK Private Capital |
| Vertax Accountants Ltd |
| Vineyard Accountants Ltd |
| Vital Health |
| Viv Cole Associates Ltd |
| Wellstate HTA Limited |
| West End Styling |
| WildeDogs |
| Wishbone Property Ltd |
| Xero |
| Yellow Zebras Consulting Ltd |
| ZDY Property Ltd |