In a sweeping consultation, HMRC plans draconian reporting requirements on directors’ loan accounts and participator loans to connected companies.
For full details, see Reporting company payments to participators
The consultation closes for comment on 10 June at 9:30am.
The SPA needs to hear your views before the end of May so that we can respond on your behalf. We would also urge you to send your comments to HMRC.
We will collect your views and formulate an SPA view.
Close companies are those controlled by five or fewer participators, or by any number of participators who are directors. A participator is usually a shareholder.
HMRC pointed to ‘a failure to distinguish between the company’s and the participator’s monies’, adding ‘the level of control allows close companies to easily structure their affairs to minimise the tax charge on participators, ranging from benign planning to aggressive avoidance’.
The 20-question consultation seeks views on proposals to introduce new requirements to report transactions between close companies and their participators, the scope of the transactions to be included and the reporting timeframe and format.
HMRC are focussing on the following transactions:
- payments, via cash, bank transfer or otherwise;
- sales of assets to the company;
- purchases of assets from the company;
- dividends or other distributions; and
- any other transfer of value from the company to the participator.
If these proposals go ahead, HMRC will require the above details in relation to all participators. HMRC acknowledged ‘this may be complicated when the close company is part of a group and there are a significant number of intra-group transactions’.
Whilst the reporting framework is undecided HMRC has indicated that the preferred option is an annual reporting cycle aligned with the existing company tax return.
We need your help to try and keep the changes simple. Please reply to howard.gross@spa.org.uk
