01 Apr 2026
A new consultation, ‘Reporting company payments to participators’ has been published, inviting views on proposals to introduce new requirements to report transactions between close companies and their participators to HMRC.
The government believes that the risk of error and tax evasion is greatest in close companies, where the legal distinction between the company and its participators is sometimes misunderstood, and the level of control can enable tax avoidance. HMRC’s investigations have concluded that they are not receiving the full picture on how close companies interact with their participators.
Under the proposals, close companies will be required to provide HMRC with detailed information on transactions between the company and its participators, including:
• Payments, via cash, bank transfer or otherwise.
• Loan repayments and write offs.
• Sales of assets to the company.
• Purchases of assets from the company.
• Dividends or other distributions.
• Any other transfer of value from the company to the participator.
Salary and wage payments would not need to be reported under any new mechanism introduced, as they are already captured as part of PAYE reporting.
We are monitoring this development closely and will keep you updated as plans develop.
New Dividend data being collected via 2025/26 self Assessments
Finance Act 2024 introduced powers to enable the collection of additional data on income tax self-assessment and allowed for HMRC to specify the particular information required.
HMRC now have powers to collect additional information from company directors and, as a result, the 2025/26 self-assessment tax returns will require the following information:
• If the taxpayer was a director of a company;
• If the company was a close company;
• The company’s name and registration number;
• Dividends the taxpayer received from the close company during the tax year; and
• The highest percentage shareholding that the taxpayer held during the tax year.
Combined with the above consultation and more detailed disclosure requirements for company accounts, we can see that HMRC will have increased access to information on dividends and director transactions . It will pay to make sure that dividend procedures are tight, lawful and compliant.
As always, please contact us if you have any questions.
