In a move aimed at tackling the £14.7bn small business tax gap, HMRC has set out proposals requiring close companies to provide more detailed information about transactions between the company and its participators. This would include cash withdrawals, asset transfers, dividends, loans, repayments and loan releases.

Close companies are companies controlled by five or fewer participators, or by any number of participators who are also directors. A participator is someone with a share or interest in the capital or income of the company. In practice, this means that nearly all small owner-managed and privately owned companies would be caught by the rules.