Federal Policy
HMRC Proposes Close Companies Reporting Changes
March 24, 2026
HM Revenue & Customs (HMRC) has initiated a consultation proposing enhanced reporting requirements for close companies and their participators, including directors of contractor limited companies. The proposed changes aim to modernize the reporting framework to provide HMRC with clearer visibility into financial transactions such as salaries, dividends, loans, and other value transfers. This signals a potential shift toward increased scrutiny and regulatory controls on remuneration structures commonly used by contractor directors, particularly the low-salary, high-dividend approach.
- Procurement professionals and contractors should anticipate evolving compliance obligations that may affect contractor company financial reporting and tax planning.
- Organizations providing payroll, tax advisory, and compliance services may see increased demand for expertise in navigating the new reporting requirements.
- This development indicates a government focus on transparency and control over director remuneration, which could influence contract structuring and contractor engagement strategies.
- Businesses operating in or with UK-based contractor limited companies should evaluate the impact of these proposals on their financial and contractual arrangements.
the government's direction of travel is irreversibly towards closer controls on how money is transferred to directors and shareholders
— Carolyn Walsh
Agencies
HM Revenue & Customs