Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Close company definition

What does Close company mean? In tax practice, a close company is a company effectively controlled by a small group of owners or by its directors, attracting specific corporation tax rules. The term is defined in statute: in the UK by the Corporation Tax Act 2010 and in Ireland by the Taxes Consolidation Act 1997. A company is “close” if it is controlled by five or fewer participators (counting their associates) or by participators who are directors. Control is assessed by reference to voting power, share capital, rights to income and rights to assets on a winding up. Accordingly, a company where more...

UK close company tax: CTA 2010 s455 loans, s1064 distributions, s464A avoidance charge; related rules, penalties, and HMRC 2026 consultation on reporting of transactions with participators

Published by a LexisNexis Tax expert

Practice notes

GOVERNMENT CONSULTATION :

The government is consulting on proposals to require close companies to give HMRC more granular information about transactions with participators (usually shareholders). In scope are:

Cash withdrawals
Loans
Debts
Dividends
Other distributions
Asset transfers

Items already reported via RTI, such as salary, would be excluded. Reported data would set out the recipient, amount, date, and identifying details, potentially including NI numbers. Views are sought on the scope, timing and delivery method (for example via CT600A, the company tax return, or a digital service), whether repayments, releases and write‑offs of loans should be included, and whether existing penalties are adequate or bespoke penalties are needed. The consultation closes on 10 June 2026.

Introduction and summary of main rules

Without specific rules, a company controlled by a small number of persons could structure its affairs to enable those persons to sidestep income tax. Legislation to counter the avoidance of income tax through companies was first enacted in 1922, aimed at companies that had not distributed a ‘reasonable part’ of their profits to shareholders. The rules have been revised over time to reflect developments in the income tax regime and changing avoidance behaviours...

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Web page updated on 22/05/2026

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