ACCA welcomes the opportunity to comment on the joint consultation issued by HM Revenue and Customs (HMRC) and HM Treasury (HMT) on Reporting company payments to participators - modernising the reporting framework. We appreciate the consulting parties’ acknowledgment that most small businesses seek to operate responsibly and comply with their tax obligations in what is known to be a complex area of interaction between company law and tax law and administrative practice. While we support efforts to address the small company tax gap, we ask that HMRC consider that before the issuing further consultation. Carrying out a more thorough evaluation of the current and future reporting obligations that small and some medium sized entities face and will face would have helped HMRC and HMT to develop more proportionate and targeted proposals.

The aim of the measures is to identify non-compliant taxpayers to reduce the tax gap.  However, any additional reporting requirements would also impose obligations on compliant taxpayers. The current proposals would capture a vast range of transactions, a significant proportion of which are exempted from the change based on their type or value and in respect of which no tax liability could ever arise. We believe that HMRC should present clear and costed evidence that the new proposals, which might help them understand the flows of value between close companies and their participators. This would demonstrate that the value to the Exchequer and society clearly outweighs the additional burden imposed upon compliant taxpayers of reporting transactions which Parliament had expressly removed from the reporting requirement. HMRC should recognise that taxpayers who are deliberately misreporting under the current regime could reasonably be expected to continue to misreport under any new regime, reducing any positive value it might have for HMRC.

ACCA would urge HMRC to fully explore the use of the iXBRL accounts, which every close company must file in conjunction with existing CTSA, ITSA and RTI returns. A simpler requirement for close companies to provide the NINOs of participators so that HMRC can use the information it already has to identify potentially anomalous situations might deliver equivalent benefit without creating an additional administrative burden for both HMRC and taxpayers. We are concerned that the challenges of dealing with taxpayers, who have no chargeable transactions but struggle with the additional reporting requirements, has the scope to further damage the tax morale of small business owners.

We are disappointed that the proposals do not consider the information that HMRC and other departments already hold. There is limited detail addressing the proposals’ impact on the wider reporting landscape, alignment with HMRC Charter principles, the duplication interaction with reporting obligations, and cost impacts on smaller businesses. This is below the standard that we would expect from HMRC.

In a fast-changing world, SMEs want a clear tax and spending framework that enables them to plan effectively. As ACCA has previously highlighted, we believe the biggest barrier to this is the cumulative burden of regulation.^[1] This is reflected in the Q1 2026 results of the Global Economic Conditions Survey (GECs) that ACCA runs in partnership with the Institute of Management Accountants.^[2] The findings point to a weak economic outlook for UK SMEs, with confidence levels remaining close to its record low set in Q4 2024 in the aftermath of the Autumn Budget. The byproduct is making it that much harder for businesses to plan and forecast with certainty. Such sentiment is reflected in ACCA member feedback following the 2025 Budget, where 80% viewed the announced measures negatively.^[3]

Alongside responding to consultation questions, ACCA makes the following recommendations:

• Simplicity, certainty and stability: ACCA continues to advocate for these three principles as the cornerstones of an effective tax system.^[4] HMRC must explain how key proposals interact with overlapping legislation, including relevant sections and definitions under the Companies Act 2006.
• Clarity on reportable payment triggers: ACCA questions the efficacy of mandatory reporting of all transactions with participators. As well as the proportionately aspect, we have identified uncertainties surrounding treatment of directors’ loan accounts (DLA) and dividends.
• Extend reporting where close companies release or write off loans: ACCA sees merit in the proposal and believe it can help reduce illegal tax avoidance. We would like to see HMRC examine its existing powers and whether they could be better utilised.
• Alignment with reporting timelines: ACCA views proposals to introduce monthly or quarterly reporting as a challenge for SMEs. We caution against introducing unnecessary reporting requirements that conflict with year-end accounting periods.

To read the response in full, please download the consultation document found on this page.

[1] ACCA comments to House of Lords Industry and Regulators Committee (2026), Inquiry into the relationship between regulators and economic growth, available here.

[2] ACCA policy and insights report (2026), GECS Survey: Q1 2026, available here.

[3] ACCA comments to House of Lords Industry and Regulators Committee (2026).

[4] ACCA policy and insights report (2023), Twelve tenets of tax, available here.