HMRC has set its sights on the £14.7 billion small business tax gap, and the crosshairs are resting squarely on close companies.
A new consultation (launched March 19, 2026) proposes mandatory, detailed reporting of every transaction between a company and its owners. We’re moving from “annual summaries” to a world where every bank transfer, asset sale, and dividend could be scrutinized in high definition.
Why this matters:
For decades, the “Director’s Loan Account” has been a flexible tool for family-run businesses. HMRC now argues that the “blurring of boundaries” between personal and company cash is a primary driver of tax error and evasion.
The Proposal Includes:
- Mandatory Reporting: Real-time or annual digital logs of cash withdrawals, loans, and asset transfers.
- Identification: Providing National Insurance numbers for all “participators” to allow automated cross-referencing with personal tax returns.
- Stricter Oversight: New penalties for omitting transactions that were previously buried in the year-end “wash-up.”
The Big Question:
Is this a necessary step to level the playing field, or is it an administrative chokehold on the “engine room” of the UK economy?
If your company is controlled by five or fewer people, the way you handle your money is about to change.
The consultation closes on 10 June 2026.
