April’s tax highlights
In the ever-changing world of tax, there is a non-stop stream of information from HMRC. Much of it relates to increased compliance activity and directors’ loans are clearly in focus.
Reporting company payments to participators
A consultation has been launched to seek views on proposals to introduce new requirements to report transactions between close companies and their participators to HMRC. The driver for change in this area is that over 60% of the overall tax gap relates to small businesses and closing the tax gap is one of HMRC’s priorities.
This consultation will be of key interest to close companies (those controlled by only a few participators) as their reporting requirements could significantly increase; proposals include providing detailed information on payments, sales and purchases of assets, dividends and any other transfers of value.
Tell HMRC about loans that participators have repaid in full
In addition, HMRC has launched a tool to confirm to HMRC that participators have fully repaid any loans declared on the Company Tax Return.
The purpose of the tool is to ensure that close companies are meeting their obligations to pay temporary s455 tax on any loans to participators.
Hundreds of employers handed penalties for illegally underpaying workers
HMRC NMW compliance continues and 389 employers from across the UK have been named for failing to pay the NMW to thousands of workers.
This was the final naming round before the Fair Work Agency commences its work on 7 April, a new body designed to bring worker’s rights enforcement under one roof for the first time and offer a streamlined process for employers to get guidance on how to follow the rules.
Given the increase in the NLW and NMW from 1 April, employers should ensure that they remain compliant.
Multi-factor authentication and HMRC agent accounts
And finally, HMRC will be introducing multi-factor authentication to HMRC agent accounts in 2026, according to the ATT. This will mean adding a second step of asking for a security code when logging into your agent online account(s).
Firms will need to manage this process and consider how they will manage these codes within their firm.