HMRC Publishes Open Consultation Regarding Reporting Payments To Participators

On 19th March 2026, HMRC published their open consultation regarding the reporting framework for reporting payments to participators.

The open consultation seeks views on proposals to introduce new requirements to report transactions between close companies and their participators to HM Revenue and Customs (HMRC).

The government will be consulting on proposals to possibly make it mandatory to report transactions between close companies and their participators - participators are shareholders of companies. They will also look at the scope of transactions to be included in the report including the requirements as to what will need to be reported and the timing of the reports.

HMRC want to make sure that all companies pay the tax that they owe and state that the risks contributing to the tax gap in the small company population are:

• under-reported income and over-claimed expenses

• error and evasion in transactions that occur between a company and its owners

Close companies are those controlled by 5 or less participators.

HMRC seeks to:

• gauge taxpayers’ understanding of current legislative requirements and establish what support is available to them in this regard

• gain a deeper understanding about the information currently recorded by close companies in relation to participators

• obtain views on collecting data and reporting it to HMRC, and whether there are any areas of particular challenge for reporting

HMRC plans to mandate the requirement of close companies to provide detailed information on all transactions between a company and its participators including:

• payments, via cash, bank transfer or otherwise

• 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

You can state your opinion on the above proposal by heading over to GOV.UK and completing the online form, responses should be sent by 10th June 2026.