The Association of Chartered Certified Accountants (ACCA) has called on HM Revenue & Customs (HMRC) and HM Treasury (HMT) to revise proposals that would expand reporting on payments made by close companies to participators.
The plans are outlined in the consultation ‘Reporting company payments to participators – modernising the reporting framework’.
The ACCA acknowledged the government’s aim of narrowing the small company tax gap but argued the measures would mainly increase red tape for businesses that already comply, while having little effect on deliberate rule‑breakers.
The body says the draft rules would pull in a wide range of transactions, including many that are exempt by type or value and could never generate a tax charge.
It is also “disappointed” that the consultation does not consider the information already held by HMRC and other departments.
ACCA UK Technical and Strategic Engagement head Glenn Collins said: “It is good to see that the government is aware that most small businesses seek to operate responsibly and comply with their tax obligations. We support efforts to address the small company tax gap.
“However, before issuing the consultation HMRC should have carried out a more thorough evaluation of the current and future reporting obligations that small and some medium-sized entities face and will face.
“This would have helped HMRC and HMT to develop more proportionate and targeted proposals.”
The ACCA wants HMRC to provide clear evidence that the extra data would deliver benefits exceeding the costs for compliant companies.
Instead of introducing the proposed framework, the ACCA is urging HMRC to make fuller use of existing iXBRL accounts filed by all close companies alongside CTSA, ITSA and RTI submissions.
ACCA EEMA and UK policy manager Christian Novak said: “We believe that HMRC should present clear and costed evidence that the new proposals to demonstrate that the value to the Exchequer and society clearly outweighs the additional burden imposed upon compliant taxpayers.”
The ACCA recently supported HMRC’s plan for standardised, fully tagged digital company tax returns but warned that added compliance must stay proportionate.
“ACCA urges HMRC to scale back new reporting demands on small businesses” was originally created and published by The Accountant, a GlobalData owned brand.
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