The Institute of Chartered Accountants in England and Wales (ICAEW) has raised concerns that new government proposals for HMRC financial reporting will impose excessive administrative demands on small businesses while failing to address tax evasion effectively.
The organization critiqued plans outlined in a March 2024 consultation, which require close companies—those controlled by five or fewer participators—to file transaction details with HMRC. While the government argues this measure targets “errors and evasion” to reduce the small business tax gap, the ICAEW asserts it disproportionately burdens compliant firms without meaningful progress toward closing the tax gap.
The proposal applies to companies controlled by five or fewer participators or entities where participators also act as directors. ICAEW highlighted that the added reporting obligations risk placing significant compliance costs on businesses, particularly when HMRC may lack the capacity to process or utilize the generated data efficiently.
In its submission to the Autumn Budget 2025, the institute emphasized that “doing business in the UK is too uncertain, too difficult, and too expensive.” It urged a shift toward targeted compliance strategies, such as strategic audit risks and well-trained HMRC staff, rather than broad data collection.
The ICAEW contended that deliberate tax evasion and hidden economic activity would be better tackled through proportional enforcement mechanisms than through sweeping reporting mandates. It called on the government to prioritize reducing regulatory complexities before introducing new requirements, aligning proposals with its stated growth agenda.
The news outlet notes that these comments follow previous ICAEW critiques of the UK’s unstable tax policies, reinforcing its plea for streamlined regulations to support compliant businesses.
