Understanding HMRC's Communications with Persons with Significant Control Over Companies

CREATED BY ROGER EDDOWES Published: 26/06/2025 @ 09:00AM #personswithsignificantcontrol #HMRC #taxcompliance #CompaniesHouse #UKbusiness

HMRC has recently commenced a review involving persons with significant control over companies, prompting these individuals to reassess their income and gains for the tax year 2023/24. This initiative is intended to ensure compliance and provide guidance on fulfiling tax obligations effectively ...

Persons with significant control over companies, Hold the fate of business, Power in their hands

HM Revenue and Customs has recently taken decisive steps to reach out to persons with significant control (PSCs) over companies. These individuals play a crucial role in corporate governance and financial practices; therefore, their compliance with tax obligations has become paramount. The correspondence from HMRC serves not only as a reminder of their responsibilities, but also as a comprehensive guide to navigate potential complexities related to income and gains for the 2023/24 tax year.

Persons with significant control have the ability to exert
influence over companies in which they are involved!

Primarily characterised by ownership of more than 25% of shares or voting rights, the definition of a PSC extends to individuals who can appoint or remove a majority of directors or exert considerable influence over business decisions. Consequently, it is imperative for these individuals to regularly review their tax obligations and ensure all income and gains are accurately declared.

The primary motivation behind HMRC's outreach is the observed discrepancies in declared income by PSCs. Notably, persons with significant control may encounter tax implications that arise from various scenarios. For instance, if a PSC has the company cover personal expenses, utilise company assets, or engage in transactions involving loans or share sales, each of these circumstances could potentially create a taxable event that requires proper declaration to HMRC.

HMRC's communication is presented in two distinct forms, based on the individual's tax compliance status:

• For those who filed a tax return for the 2023/24 tax year, the first letter encourages PSCs to scrutinise their returns and rectify any discrepancies by the set deadline of 25 July 2025. This proactive approach helps alleviate the burden of tax-related penalties and fosters a culture of transparency and accountability among individuals of influence within the business realm. The correspondence includes explicit instructions on amending returns, ensuring that PSCs have access to the necessary guidance required for compliance.
• Conversely, for individuals who have not submitted a tax return for 2023/24, HMRC's second letter prompts these PSCs to assess whether a tax return is indeed required and to take the requisite action of filing it by the same deadline of 25 July 2025. The importance of compliance cannot be overstated, especially as failure to adhere to these guidelines could result in significant consequences, ranging from financial penalties to increased scrutiny from HMRC.

As such, it is essential for PSCs to remain vigilant and responsive to HMRC communications, seeking clarification as needed.

Tax compliance for persons with significant control encompasses not only their income from direct salary or shares, but also includes a myriad of scenarios where their position within the company can lead to taxable gains.

The obligation extends to ensuring that all sources of income and gains are accurately reported in subsequent tax returns, including for the 2024/25 tax year. By attending to these aspects, PSCs can mitigate the risk of discrepancies and promote a position of fiscal responsibility.

PSCs should regularly consult with their
accountants and tax advisers!

Such collaboration can yield significant benefits, allowing PSCs to navigate the complexities associated with corporate governance, shareholder agreements, and tax reporting obligations. Seeking professional guidance can further facilitate a smoother tax process and help ensure that potential financial pitfalls are avoided.

Knowing the deadlines set forth by HMRC is essential. The letters issued by HMRC not only provide a timeline for addressing potential issues, but also exemplify the agency's commitment to ensuring fair tax practices across the board. Taking proactive measures, such as filing adjustments or submitting returns promptly, conveys diligence and accountability, characteristics that are integral to an individual's standing in the business community.

Ultimately, it is of utmost importance for persons with significant control to remain informed about their obligations concerning income and gains. These recent communications from HMRC act as both a warning and a roadmap for these influential individuals to engage proactively with their tax responsibilities.

Persons with significant control over companies must recognise their pivotal role in governance and maintain a diligent approach towards their tax responsibilities, thus demonstrating the significance of accountability within the business domain.

Until next time ...

ROGER EDDOWES
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

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