I track every transaction between my clients' companies and their directors. Dividends, loan movements, asset transfers, ad-hoc reimbursements. It sits in the accounts, and it feeds into the tax return. What I do not do is report each one individually to HMRC with a name, date, NI number and amount attached. That could change.
TL;DR: HMRC has launched a consultation proposing that every close company reports all transactions with participators (directors, shareholders) directly to HMRC. The consultation closes 10 June 2026. If you run a Ltd company with the standard salary-plus-dividends setup, this is about you.
What Is HMRC Actually Proposing?
On 19 March 2026, HMRC published a consultation on reporting company payments to participators. The proposal is straightforward: every close company would report details of every transaction between the company and its participators. That includes dividends, cash withdrawals, director's loan movements, asset sales, and a catch-all category of "any other transfer of value."
The only exemption is salary already reported through RTI. Everything else gets disclosed - with the participator's name, address, NI number, and the amount and date of each transaction.
Right now, HMRC sees salaries via RTI and dividends via Self Assessment. Director's loan movements only surface when they trigger a Section 455 charge on the CT600A. The gap in between is where HMRC thinks the compliance problems live.
The Numbers Behind the Consultation
The numbers explain the urgency. The small business corporation tax gap hit £14.7 billion in 2023-24, representing 40.1% of the theoretical CT liability for that segment (HMRC Tax Gap Report, 2025). The overall corporation tax gap has grown from 6.4% in 2011-12 to 15.8% in 2023-24 (KPMG, 2025). Small businesses account for 60% of the total UK tax gap.
HMRC's view is that close companies - and there are millions of them, since virtually every private company controlled by five or fewer people qualifies - present a higher risk because the boundary between the company's money and the director's money gets blurred. I understand the logic. I have seen plenty of DLA balances that creep up year-on-year because nobody treated the overdrawn balance as a real debt.
Does This Actually Create New Work?
This is where the practitioner community splits. One camp says this is not new work: I already track all of this in my clients' accounts, and any competent accountant does the same. The other camp points out that tracking transactions in a set of accounts is different from reporting them individually to HMRC with NI numbers attached. That second camp is right.
My accounting software does not automatically hold a director's NI number against every transaction line. A dividend voucher records amounts and dates. A DLA movement is a journal entry. Pulling all of that into a reportable format with personal identifiers means either manual extraction or a new software process. For a sole practitioner handling 30 company clients, that is a real cost - not ruinous, but not zero. It also lands at the same time as mandatory tax agent registration and the ICAEW credible basis test - a busy compliance summer for anyone running a small practice.
HMRC has not decided on the reporting mechanism yet. They are considering three options: updating the existing CT600A, expanding the Company Tax Return itself, or building a new digital submission system. The SPA has described the proposals as "draconian reporting requirements", while ICAEW's Tax Faculty is collecting member feedback before responding by 13 May.
What Should You Actually Do Before June?
If you run a Ltd company with a salary-and-dividends structure, the immediate action is nothing dramatic. This is a consultation, not legislation. But there are two things worth doing now.
First, check your record-keeping. Can you produce a complete list of every payment from the company to its directors for the last financial year, with dates, amounts, and categories? If the answer is yes, you are already where HMRC wants you. If the answer involves opening a bank statement and working backwards, that is the gap this consultation is trying to close.
Second, consider responding. The consultation has 21 questions and closes 10 June 2026. Professional bodies like ICAEW and the SPA are submitting their own responses, but HMRC also wants to hear from individual businesses and advisers. If you have views on the administrative cost, tell them. The compliance burden question is one they specifically ask about.
My own view: the principle is sound. If a company is paying its directors, HMRC should know. The risk is in the breadth of "any other transfer of value" - a phrase wide enough to catch a director using a company credit card for fuel, which is already accounted for as a benefit in kind. Proportionality in the final design matters more than the principle.
Frequently Asked Questions
What is a close company for HMRC purposes?
A close company is one controlled by five or fewer participators, or by any number of participators who are directors. In practice, nearly every UK private limited company qualifies. There are over 5.4 million companies on the Companies House register, and the vast majority of private ones meet this definition.
Will HMRC see my director's loan account movements?
Under the current system, HMRC only sees DLA movements when they trigger a Section 455 charge at 33.75% (rising to 35.75% for loans made after April 2026), reported on the CT600A. The consultation proposes reporting all DLA movements - both drawings and repayments - regardless of whether Section 455 applies.
How do I respond to the consultation before 10 June 2026?
HMRC accepts responses through an online form or by email. There are 21 questions covering your understanding of current rules, record-keeping practices, transaction volumes, and views on administrative burden. If you are a sole trader or small practice, the questions on proportionality and cost are where your input matters most.
If you run a Ltd company and want to talk through what this consultation could mean for your salary-and-dividends setup, get in touch - I am working through it for my own clients and happy to share what I am seeing.