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Will Stricter Penalties Curb Dishonesty

Thu, 02 Jul 2026 10:36:31 GMT

Dishonest Taxpayers are in the Firing Line

The landscape of tax compliance is shifting. As the government seeks to close the persistent "tax gap"—the difference between the amount of tax that should, in theory, be paid to HMRC and what is actually collected—it has introduced a consultation exploring a new criminal offence: the reckless making of untrue statements or declarations in direct tax documents.

The intention is to provide prosecutors with a broader range of options, thereby allowing for lesser alternative charges in cases where dishonesty cannot be proven but reckless conduct is evident. Currently, the legal threshold for criminal prosecution in tax matters is exceptionally high, often requiring evidence of deliberate fraud or intentional deception. This new proposal aims to fill the "middle ground" between a simple administrative error and outright criminal fraud.

The Rationale: Closing the Tax Gap

The urgency of this proposal is rooted in the latest HMRC Tax Gap figures for 2024/25, which estimate the total loss to the Exchequer at 6.4% of total theoretical tax liability. Of significant concern to policymakers is the contribution of small businesses, which account for 62% of these total losses some of which is down to dishonest behaviour.

By targeting "reckless" behaviour—defined as failing to take reasonable care or ignoring the risk that a statement provided to HMRC might be untrue—the government is shifting the burden of accuracy onto the taxpayer. The government’s rationale is clear: if the system relies on self-assessment, the integrity of the data provided by the taxpayer is paramount, and they argue that existing civil penalties are insufficient to deter those who are indifferent to the truth, and that a criminal deterrent is necessary to shift behaviour among those who might otherwise "chance their arm" when submitting returns.

This initiative is part of a broader digital transformation. With the introduction of Making Tax Digital (MTD) for Income Tax arriving in April 2026, the government is providing small businesses, freelancers, and landlords with the digital tools to "get it right" in real-time. This proposed offence acts as the "stick" to MTD’s "carrot," signalling that while the government wants to facilitate easier compliance, it will no longer tolerate the "reckless" disregard for accuracy that facilitates significant tax losses.

Distinguishing Careless from Reckless

To understand how this might impact you and your business, it is vital to distinguish between a simple mistake and a "reckless" error. The following table outlines the government’s current interpretation of these behaviours.

Table 1: Careless v Reckless Error

Table 2 : Examples of Types of Behaviour

The Impact on small businesses, freelancers and landlords

For the average freelancer or landlord, this proposal should act as a prompt to review the accuracy of the figures supplied to HMRC on their Self-Assessment tax return. The government is essentially signalling that "I didn’t know" is not a valid defence, if the taxpayer was in a position to know but failed to take reasonable steps to verify the information.

If implemented, this new offence could lead to unlimited fines and the threat of imprisonment for those found guilty of recklessness. While the government maintains that this is intended for the "most serious" cases, the introduction of a new criminal threshold inevitably raises the stakes for every self-assessment return filed.

Conclusion: Is it enough to stop falsification?

Whether the threat of criminal prosecution will actually stop deliberate or reckless falsification remains to be seen. Critics might argue that small businesses often struggle with the complexity of the tax system, and that criminalising "recklessness" could inadvertently punish those who are simply overwhelmed by red tape rather than those attempting to cheat the system.

It is a shame that due to the actions of ‘bad actors’ who consistently under-declare income, or in other ways cheat HM Treasury, that millions of honest taxpayers will be terrified of the consequences of making a genuine mistake. We can only hope that HMRC is good to their word when it comes to honest taxpayers when they make the odd, honest mistake.

However, the government’s focus is undeniably on the bottom line. With 62% of tax losses originating from the small business sector, HMRC is clearly signaling that the era of "self-certification" is becoming increasingly audited. For taxpayers, the message is simple: as the digital tools for reporting tax improve via MTD, the tolerance for "reckless" errors is shrinking to zero. Professional due diligence is no longer just a best practice—it is becoming a vital shield against potential criminal liability.

Visit Gov.UK to read the consultation document

https://www.gov.uk/government/consultations/proposed-offence-for-reckless-untrue-statements-direct-taxes/introducing-a-criminal-offence-for-making-reckless-untrue-statements-or-declarations-in-direct-tax--3

And the latest reported Tax Gap figures that are the catalyst for more stringent controls over taxpayers tax affairs being proposed by the Government.

https://www.gov.uk/government/news/tax-gap-2024-25-estimated-at-64

Proposal to Mandate VAT and PAYE Payments by Direct Debit

Mon, 29 Jun 2026 13:52:14 GMT

To pay by Direct Debit or not to pay; that will soon no longer be the question

The government announced at Autumn Budget 2025 that it would consult on improving the timeliness of Pay As You Earn (PAYE) and Value Added Tax (VAT) payments through requiring payment of these liabilities by Direct Debit. Now the government is seeking views on plans to require businesses to pay their PAYE and VAT return liabilities by Direct Debit.

The core proposal is to mandate Direct Debit as the primary method for paying VAT and PAYE for most businesses noting that around 87% of businesses will be affected and there will be a very few exceptions to this rule. While the stated aim is to simplify payments, reduce administrative burdens, prevent late payments and tax debt, and ultimately close the tax gap, currently estimated at 6.4% of total revenue due in 2024/25 (see https://www.gov.uk/government/statistics/measuring-tax-gaps/1-tax-gaps-summary )

VAT: The consultation document asks about awareness and experience with Direct Debit for VAT. Most businesses submit VAT returns quarterly. Payment is due one calendar month after the end of the accounting period. Provided a return is submitted electronically, an additional 7 day extension applies to payment of liabilities arising from the same return by electronic means. Once a direct debit is set up through the VAT online account the payment is collected three days after the due date

PAYE: The document outlines current PAYE payment methods, notes that large employers already have some electronic payment obligations and asks about awareness and experience with Direct Debit for PAYE. Direct Debit collection occurs shortly after the 22nd of the month or 4 working days after the return is filed (if filed after the 19th of the month).

The rationale for mandating Direct Debit payments includes;

• Unpaid tax liabilities create costs for businesses and HMRC.

• Late payments are often due to oversight or incorrect reference delaying correct allocation, not the inability to pay.

• Current manual payment processes for VAT and PAYE are seen as administratively burdensome.

• Direct Debit offers a more automated and “right first time” payment journey.

The government intends to encourage compliance if/when paying VAT and PAYE by Direct Debit becomes mandatory and the proposals are:

a penalty where a payment is not made by Direct Debit (and the payer is not excepted), meaning a penalty could apply even if the payment is otherwise made in full and on time.
a timing incentive, for example by restricting existing payment deadline extensions so that they apply only to payments made by Direct Debit.

From a business owner’s perspective, the proposal to mandate Direct Debit for VAT and PAYE brings a mix of potential benefits and significant concerns.

Reduced Administrative Burden: The prospect of payments being automatically collected after submission is appealing. Manually initiating each payment, ensuring the correct reference is used, and tracking deadlines for both VAT and PAYE is a recurring administrative task that can be time-consuming and prone to errors. Automating this through Direct Debit could free up valuable time and resources.

“Right First Time” Approach: If set up correctly, Direct Debit can indeed lead to payments being made accurately and on time, avoiding the stress and cost of late payment penalties, interest charges, and follow-up communications with HMRC.

Cash Flow: While HMRC states that late payment is often linked to oversight, for many small and medium-sized businesses, the timing of cash flow is critical. For example, VAT and PAYE are often paid from incoming revenue. If incoming payments are delayed, but the Direct Debit for VAT or PAYE is collected on a fixed date, it could lead to a cash shortfall, potentially causing more significant problems than an occasional late payment managed manually.

The current system allows some flexibility to “hold onto” funds slightly longer if necessary, or to strategically time payments based on incoming cash. Mandating a fixed collection date removes this flexibility.

So, how will HMRC handle a Direct Debit payment that fails due to insufficient funds? Will this automatically trigger penalties, or will there be a grace period?

While automation is a benefit, it also means a loss of direct control over the payment outflow. Businesses will need to trust that their bank accounts have sufficient funds on the specific collection date, meaning the VAT collected and PAYE deducted from wages and salaries will need to be kept separately or unspent, so that this money is always available in the bank account to meet Direct Debit payments.

While the long-term aim is to reduce a burden on businesses, setting up new Direct Debits, ensuring correct authorisations, and managing the transition for multiple tax regimes (VAT, PAYE) will require initial administrative effort. The easiest way to set up a Direct Debit mandate is via the business’ online tax account. If this has not already been done, add VAT and PAYE as taxes to the account, wait for an authorisation code to be sent by post to activate each one. Then set up a direct debit mandate for each tax from there.

The consultation acknowledges exceptions, but the practicalities for businesses with fluctuating cash flows or those who rely on specific payment cycles are unlikely to be treated as one. This is because HMRC expects businesses to not use money that should effectively be set aside to pay HMRC simply to improve cashflow.

While the goal of simplifying tax payments and reducing debt is laudable, the mandatory imposition of Direct Debit payments could cause significant cash flow challenges and reduce a business’s ability to manage its finances proactively, especially for SMEs. We can guestimate that this measure will come into force in 2027 or 2028, and so businesses will have maybe a year or two to take the necessary actions tailored to their individual circumstances.

In businesses where Direct Debit payments will cause issues, cashflow will need to be more closely monitored and the underlying tax charges recognised as part of the cash in bank total on at least a monthly basis; reducing spending or letting late paying customers go, if either of these have an adverse effect on the business’ ability to meet its tax liabilities on the due date. If this is not a viable option, then invoice financing should be considered. There is a cost involved but this would be outweighed by constant failed Direct Debit charges and late payment penalties.

The consultation closes on 16th August. Access the document for more information here; https://www.gov.uk/government/consultations/requiring-paymentof-vat-and-paye-return-liabilitiesbydirect-debit

MTD for Income Tax: Feeling Overwhelmed by Looming Deadline?

Fri, 19 Jun 2026 07:04:18 GMT

Beat the deadline in a few easy steps

The deadline for your first Making Tax Digital (MTD) for Income Tax return is fast approaching – due by 5th August! If you’re feeling overwhelmed by these new rules, haven’t started, or are finding it all a bit of a headache, you’re not alone. The good news is, there’s a straightforward path to sorting this out, and I can help you with that.

Step 1: Get the Right Tool

The first step is to get your hands on the right software. Xero is a popular choice for MTD compliance and offers comprehensive guidance on their platform, read up on MTD for Income Tax and Xero including the subscription plan: https://www.xero.com/uk/programme/making-tax-digital/

Step 2: Ensure You’re Registered

Before you dive into the software, ensure you’re registered for MTD for Income Tax. You can find the official sign-up guidance here: https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax

Step 3: Set Up Your Xero Account

Once subscribed, setting up your Xero account is straightforward. After logging in, you can personalise your dashboard – Xero will prompt you. The key step is linking your business bank account (you’ll need your online banking login details for this). This is where Xero will pull in all your income and expenses automatically.

Step 4: Categorise Your Transactions

Once your bank transactions are loaded, you’ll need to categorise them. Xero provides clear codes for sales (customer payments) and expenses (payments to suppliers for things like materials, fuel, insurance, etc.). This ensures your tax return accurately reflects your business activity.

• Pro Tip: If you’re using a personal bank account for your business, Xero handles this but it’s crucial to code any personal transactions to ‘Owner Funds’ within Xero. This keeps your business income and expenses separate and ensures these personal payments are excluded from your tax return.

Step 5: Crucial Data Checks

Take a moment to review your bank transactions within Xero to ensure they’ve loaded correctly. If you see any transactions dated before 6th April, simply select and delete them. If any are missing, Xero has a straightforward process for importing them manually or via CSV. You can find detailed instructions within Xero’s help centre, or you can Google ‘Xero import missing bank transactions’ or I can assist you with this step.

Step 6: Prepare and Submit Your Return

Once your transactions are categorised and you’ve checked that it’s all correct, you’re on the right track to preparing your MTD return. You can access your return under the ‘Tax’ section in Xero. To submit, you’ll link your Xero account to your HMRC MTD account using your Self-Assessment login details. This process will guide you to your first submission.

Feeling Pressured? Get Expert Help to Ensure Compliance.

While I’ve outlined the steps to get started with MTD for Income Tax, I understand that for many, the pressure of new deadlines and unfamiliar software can be overwhelming. If you’re short on time, unsure about the technicalities, or simply want the peace of mind of knowing it’s done correctly, I offer a specialist MTD setup service.

For a one-off fee of £150 + VAT , I’ll personally set up your Xero account tailored to your business, ensuring accurate categorisation of your income and expenses, and I’ll handle the submission of your first MTD return.

Don’t let MTD stress you out. Get in touch today to reclaim your time and ensure this latest tax change doesn’t become a headache.

Quick Guide to your DLA

Fri, 12 Jun 2026 16:53:49 GMT

Getting your Ducks in a Row will Pay Dividends!

HMRC is tightening up the rules on how directors use their company bank accounts. Generally, any transaction which is not a payment of the director's salary or a dividend which has been properly reported, will be recorded in the Director's Loan Account; this is a practice that HMRC is targeting in an ongoing campaign.

It's fairly easy to keep your ducks in a row and avoid an unexpected tax bill with a new approach and regular monitoring.

This infographic summarises the key points; you can download an information sheet below.

Is MTD Making You Think About Setting Up a Limited Company

Sun, 31 May 2026 08:22:27 GMT

The Digital Tax Revolution is Certainly Making us Change the Way we do Business

For sole traders, one of the biggest shifts has been the introduction of Making Tax Digital (MTD). If you're finding yourself wrestling with the work involved in making quarterly digital submissions and feeling the pressure, you might have heard people talking about incorporating your company –i.e. setting up a limited company. It's often presented as a magic wand, a way to escape the MTD burden. But is it really the solution you're looking for, or could it be a costly misstep?

At Oblako, we believe in empowering you with the information you need to make the best decisions for your business. So let's peel back the layers of incorporation and see if it truly offers the escape route you've been promised, especially when it comes to MTD.

One of the main arguments for incorporating, particularly for businesses with turnovers between £50,000 and £90,000 (hovering around the VAT threshold), is the perceived benefit of only needing to file one return annually. This sounds incredibly appealing, doesn't it? Imagine shedding those quarterly MTD obligations and enjoying a simpler year. However, this often glosses over a crucial distinction. While a limited company itself files one tax return and annual accounts with Companies House, your personal tax obligations, including your income tax and National Insurance contributions, still need to be managed. And this is where MTD can still catch up with you.

The Hidden Costs and Complexities of Incorporation

While the idea of annual filing might be enticing, the reality of running a limited company comes with a significant set of financial and administrative hurdles that are often downplayed:

• Escalating Accountancy Fees: The most immediate and stark difference is the cost of accountancy. As a sole trader navigating MTD, you might be looking at a maximum of around £600 per year. In contrast, a limited company, with its added layers of compliance, typically incurs minimum accountancy fees of £1,500 per year, and often considerably more. This isn't just about filing accounts; it's about managing payroll, director's drawings that are initially treated as loans, and ensuring all the statutory requirements are met.

• Director Salaries and RTI : If you decide to pay yourself a salary as a director of your limited company, this salary is reported under Real Time Information (RTI) monthly. This means you're not escaping digital reporting; you're simply shifting it to a different, often more demanding, monthly cadence. Missing these monthly submissions can lead to similar fines for late filing as you might fear with MTD.

• The Dividend Dilemma: Many directors opt to take dividends instead of, or alongside, a salary. While dividends can be tax-efficient, they come with their own set of stringent rules. A current HMRC campaign is actively scrutinise dividend payments. If regular drawings appear to be used to cover personal expenses, HMRC can reclassify them as earnings, leading to unexpected tax liabilities. Crucially, dividends must be formally declared and backed up by a board meeting with documented minutes, along with a dividend certificate.

Drawings are never seen by HMRC to be a casual cash withdrawal; it's always been a formal financial transaction requiring proper record-keeping.

• Increased Administrative Burden : Registering a company at Companies House opens a Pandora's Box of compliance obligations. You'll need to file annual accounts, submit a confirmation statement, and take on legal responsibilities for the management and governance of the company. This means more paperwork, more deadlines, and a greater understanding of corporate law and although you may be prepared to pay an accountant to take care of these matters, the buck stops with you, not them.

• The Paperwork Paradox: Ironically, the push for digital tax, while intending to simplify things, can lead to an increase in paperwork when you incorporate. The formal requirements for dividends, board meetings, and statutory filings mean you'll be handling more documentation, even as the tax reporting itself moves online.

The True Cost of "Escaping" MTD

The narrative often presented is that incorporating is the only way to truly escape the MTD complexities. But at what cost? You're trading the stress of quarterly MTD submissions for potentially higher accountancy fees, monthly RTI reporting unless you can afford to live without a monthly salary, strict dividend rules, and a host of new corporate compliance responsibilities. For many, this is not a cost-saving or stress-reducing solution, but rather an exchange of one set of challenges for another, often more expensive, set.

A Smarter Solution for Sole Traders

Before you rush into setting up a limited company solely to navigate MTD, consider a more practical and cost-effective alternative: hiring a dedicated bookkeeper. At Oblako Services, we understand the pressures sole traders face. By partnering with a professional bookkeeper, you can:

• Eliminate the Stress of MTD Deadlines : A skilled bookkeeper will manage your digital

submissions, ensuring you meet all deadlines without the anxiety.

• Gain Expertise on a Day-to-Day Basis : You'll have access to ongoing advice and

support, helping you make informed financial decisions throughout the year, not just at

tax time.

• Free Up Your Time : By offloading the bookkeeping and MTD compliance, you can focus

on what you do best – growing your business.

• Maintain Cost-Effectiveness : The cost of a bookkeeper is often significantly less than

the combined cost of incorporating and higher accountancy fees, allowing you to remain

a sole trader and still have expert support.

Don't Let MTD Drive You to Costly Decisions

Incorporation might seem like an attractive escape route from Making Tax Digital, but the true costs and complexities can far outweigh the perceived benefits. Before you make a decision that could significantly impact your finances and administrative workload, explore all your options.Are you feeling overwhelmed by MTD or considering incorporation? Let's talk. At Oblako Services, we're here to offer clear, honest advice tailored to your specific business needs.

Contact us today for a free consultation and discover how a bookkeeping partnership can simplify your tax obligations and help you grow your business more effectively, without the unnecessary costs of incorporation.

What use is a Bookkeeper??

Mon, 25 May 2026 10:08:06 GMT

How a Bookkeeper with Expert Xero Skills Can Add Real Value to Your Small Business

Small business owners often see bookkeeping as a basic admin task, but it can play a much bigger role in the success of a business. A skilled bookkeeper does more than record income and expenses. They help keep your records accurate, your cash flow clearer, and your business more organised.

For many small UK businesses, time is the biggest pressure. When you are busy running the day-to-day, it is easy for receipts, invoices, bank reconciliations, and VAT deadlines to build up. This is where professional bookkeeping services can make a real difference. By keeping your financial records up to date, a bookkeeper helps reduce errors, support compliance, and give you more confidence in your numbers.

If your bookkeeper is also experienced in Xero bookkeeping , the benefits are even greater. Xero is a powerful cloud accounting platform that gives business owners access to live financial information wherever they are. It can streamline admin, automate routine tasks, and make it easier to track income, expenses, and outstanding payments. For small businesses, that kind of visibility can improve decision-making and help you stay in control of your finances.

A bookkeeper who has also run their own business brings something extra. They understand the pressures of managing cash flow, keeping on top of deadlines, and balancing admin with growth. That real-world experience means their support is often more practical, more responsive, and more useful to business owners who need straightforward answers rather than jargon.

At Oblako Services, we believe good bookkeeping should do more than keep HMRC satisfied. It should help small business owners save time, reduce stress, and make better decisions. Whether you need regular bookkeeping support, help with Xero, or assistance getting your records organised, the right bookkeeper can add genuine value to your business.

If you are searching for a UK bookkeeper for small business , or looking for Xero bookkeeping support , now is the time to consider how much stronger your business could be with the right financial systems in place.

Get in touch, tell me about any difficulty you are having and I'll give you a solution...

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HMRC Campaign and your DLA

Sun, 17 May 2026 21:44:09 GMT

Directors' drawings under the spotlight!

HMRC is currently running a compliance campaign targeting director loan accounts (DLAs) to identify unpaid s455 tax on overdrawn accounts, with a particular focus on loans released or written off between April 2019 and April 2023. Directors are being asked to verify DLA balances, and failure to cooperate can lead HMRC to widen checks into both the company and directors’ personal affairs, using its enquiry powers and information requests set out in the Enquiry Manual. Enquiries often begin with detailed data-gathering, and HMRC will expect directors to be able to explain and evidence how money has moved between them and their company.

For directors of close companies, the key message is that withdrawals from the company must be properly legitimised and controlled. A DLA is not a vague “director’s pot” that can be dipped into at will. Every entry should have a clear basis in law and in company records: salary approved via payroll, dividends properly declared, expenses supported by receipts and mileage logs, or loans documented with terms and repayment expectations. Where there is a pattern of regular drawings that do not match declared salary or dividends, HMRC becomes particularly interested in whether those amounts are in fact undeclared earnings.

When HMRC opens an enquiry focusing on DLAs, it usually starts by asking for a breakdown of all entries to and from the director’s account over the period in question. That will typically mean a transaction‑by‑transaction analysis, often tied back to the nominal ledger and bank statements. HMRC will then ask for an explanation of how the loans arose: for example, whether the company paid personal bills, the director withdrew cash, or the company funded living costs. They will also request evidence of repayments and settlements, such as bank transfers from the director back to the company, journal entries, or board minutes documenting a write‑off.

At this stage, HMRC is not only checking arithmetic; it is testing the credibility of the story behind the numbers. If a director claims that withdrawals are “loan repayments” or “temporary advances”, HMRC will want to see consistency: is there a loan agreement, are repayments realistic and regular, and do subsequent periods show the balance coming down? If withdrawals are described as dividends, HMRC looks for contemporaneous dividend vouchers, board minutes, sufficient distributable reserves and correct entries on the CT600 and in the director’s personal tax return. If payments are said to be expenses, HMRC expects proper claims, VAT receipts where relevant, and a clear business purpose.

Where these explanations are weak or missing, HMRC may re‑characterise withdrawals in ways that increase the tax at stake. One route is to argue that the sums are earnings from employment, subject to PAYE and National Insurance, potentially creating arrears, penalties and interest for the company. Another is to treat the drawings as loans to a participator of a close company, bringing the s455 charge into play. Section 455 Corporation Tax is a temporary tax on loans to participators (such as directors‑shareholders) that remain outstanding more than nine months after the end of the accounting period. If a DLA is overdrawn at that point, the company can face a significant s455 bill.

Although s455 is in principle repayable when the loan is cleared, HMRC is scrutinising whether loans are genuinely repaid or simply “bed and breakfasted” – briefly cleared around the year end and then redrawn. HMRC takes a dim view of circular arrangements designed only to avoid the s455 charge and may look at anti‑avoidance provisions that treat certain repayments as ineffective. This is one reason why the current campaign is drilling into loans that were released or written off between April 2019 and April 2023: a write‑off can itself trigger income tax and National Insurance implications for the director, and HMRC wants to be sure that both company and director have reported the consequences correctly.

From April 2026, a new online HMRC tool has been introduced to allow companies to confirm that loans to participators have been fully repaid. This tool is intended to tie together information already reported on the CT600A (the supplementary pages for loans to participators) with later repayments, helping HMRC to reconcile s455 charges and repayments more efficiently. For compliant companies, using the tool should give an opportunity to demonstrate that loans have been cleared and that any s455 repayments claimed are justified. For less organised companies, however, the tool may expose mismatches between what was filed originally and what has actually happened in the DLA since.

Access the tool here https://www.gov.uk/guidance/tell-hmrc-about-loans-that-participators-have-repaid-in-full

Conclusion

In practice, the current HMRC campaign is pushing directors of close companies to tighten up governance around DLAs. That means:

Keeping a detailed, up‑to‑date DLA ledger, reconciled regularly to the main accounts and bank.
Ensuring every withdrawal has an agreed treatment at the time it is made, not months later.
Recording board decisions on salary, bonuses, and dividends in minutes and supporting them with proper paperwork.
Making formal loan agreements where material sums are left owing to the company, setting commercial interest (where appropriate) and realistic repayment timetables.
Monitoring the DLA balance throughout the year, especially as the nine‑month post year‑end point approaches, to manage any potential s455 exposure.

If a director loan account has been overdrawn for a significant portion of the year, or if there have been write‑offs or complex patterns of drawings between April 2019 and April 2023, it is strongly advisable to seek professional advice. A tax adviser or accountant can review the DLA history, assess possible s455 liabilities, consider whether past filings need correcting, and help prepare clear explanations and evidence should HMRC raise questions. Getting ahead of the issue is crucial: once HMRC has opened a formal enquiry, options become narrower and penalties can quickly escalate if inaccuracies are found.

Ultimately, HMRC’s campaign is a reminder that in a close company, the line between “company money” and “director’s money” is not blurred in law, even if it sometimes feels that way in practice. The company is a separate legal entity, and any funds a director takes out must pass through a legitimate route – employment income, dividends, reimbursed expenses, or properly structured loans. Directors who treat the company bank account as an informal overdraft risk not only unexpected s455 tax but also reclassifications that create PAYE, NIC, and benefit‑in‑kind exposures, along with interest and penalties. Reviewing your DLA now, and putting robust controls around future withdrawals, is the best defence against unwelcome attention in this HMRC campaign.

Get in touch if you need help...

How Company Loans, Drawings and Dividends are Changing

Thu, 23 Apr 2026 08:36:02 GMT

HMRC plans to tighten up the way you take money and assets from your company

HMRC’s Changing Approach to Director’s Loans and Company Reporting

HMRC is consulting on changes to the way transactions between close companies and their participators are reported. For owner-managed businesses, that means a much closer focus on director’s loan accounts, dividends, drawings and other transfers of value. Some reporting changes are already appearing in Self Assessment, and HMRC’s wider proposals point towards more detailed disclosure in future.

Director’s loans

Under the current rules, a loan to a shareholder-director can create a benefit in kind where the outstanding balance exceeds £10,000 at any time in the tax year. In that case, the company must report the benefit and Class 1A National Insurance may be due. If the loan is not repaid within 9 months of the end of the company’s accounting period, the company may also have to pay the section 455 tax charge.

The section 455 charge is currently aligned to the dividend upper rate, which is 33.75% for loans within the existing regime. Dividend tax rates for individuals have separately increased from 6 April 2026, with the higher dividend rate now 35.75%.

Proposed reporting changes

HMRC has launched a consultation on reporting company payments to directors and shareholders, which could lead to a new mandatory reporting regime for close companies (companies with one to five shareholders). The proposals cover a broad range of transactions, including loans, dividends, drawings, asset sales and purchases, and other transfers of value. The direction of travel is towards annual or otherwise regular reporting with more transaction-level detail than exists today.

The consultation also indicates that amounts already reported through RTI and payroll (salaries and employee type benefits) would not need to be duplicated. That suggests HMRC is trying to build a reporting system that can match company payments with personal tax records more effectively.

What this means for directors

For directors of close companies, the practical message is that withdrawals from the company need to be documented and monitored carefully.

An overdrawn director’s loan account can trigger a benefit-in-kind charge, section 455 corporation tax for the company, and in some cases an income tax charge if the loan is written off or released.

Directors should also be aware that HMRC is moving toward more detailed reporting, which means informal drawings, loans and dividend-like payments are more likely to be visible to HMRC than before. Regular withdrawals may eventually be seen as earnings rather than dividends, especially if not supported by appropriate paperwork.

That makes it more important to keep bookkeeping up to date, minute decisions properly, and make sure there are sufficient distributable reserves before dividends are voted.

In practice, directors should review their loan accounts regularly, clear overdrawn balances before the nine-month deadline where possible, and take advice before using loans as a short-term funding method. If a loan cannot be repaid, it is usually better to deal with it early than to let the tax position become more expensive and more complicated.

Self Assessment reporting

HMRC has also introduced new Self Assessment reporting for company directors, including details about whether the company is a close company, the company name and the director’s shareholding. The purpose is to improve HMRC’s ability to match director disclosures with company records and identify loans or dividends that may have tax consequences.

Final thoughts

The key message for directors is simple: keep loan accounts, dividends and drawings under review, and do not assume that informal withdrawals are tax-free or invisible to HMRC. Current rules on director’s loans still apply, including the £10,000 benefit-in-kind threshold and the section 455 charge where loans remain outstanding after 9 months. With HMRC also moving towards more detailed reporting, good record-keeping and timely tax advice are more important than ever.

Taking Money from your Limited Company

Tue, 24 Mar 2026 10:49:39 GMT

New HMRC Consultation puts the Director's Loan Account into Focus

A proposal to introduce a legal requirement on businesses to report transactions between close companies and their participators to HM Revenue and Customs has just been announced.

https://www.gov.uk/government/consultations/reporting-company-payments-to-participators/reporting-company-payments-to-participators-modernising-the-reporting-framework

Close companies are those controlled by five or fewer participators, or by any number of participators who are directors and a participator is a person with a share or interest in the capital or income of a company; usually they are the shareholders.

At the very least, the proposal when enforced, will mean closer controls on how money is transferred to directors and shareholders from their limited company, specifically via their director's loan account (DLA), although transfer of assets and other transfers of value are being included.

In short, what does an owner/director need to do?

If you are a contractor or director of a close company using the low‑salary plus dividends model, and making regular drawings in lieu of a dividend (a share of the company profits after corporation tax is calculated) now is a good time to:

Review how you actually take money out of the company (salary, dividends, expenses, “drawings”) and check that it matches what your accounts and tax returns say.
Tighten up your records: keep a clear, up‑to‑date Director’s Loan Account, minute dividend declarations properly, and retain supporting accounts (e.g. retain a Profit & Loss report as at end of month before the drawing to be treated as a dividend) to show there were sufficient profits in the company.
Separate personal spending and company spending, so that it is always clear whether a payment is salary, a dividend, a loan, a reimbursed expense or a personal expense. Personal spending should be booked to a separate personal expenditure account, not the DLA.
Move away from “we’ll sort it at year‑end” and get into the habit of updating DLAs and dividend paperwork in real time or at least monthly if drawings in lieu of dividends are taken out monthly.
Speak to your accountant or tax adviser about whether your current strategy and record‑keeping would stand up to closer HMRC scrutiny under the proposed reporting regime.

You do not need to change everything overnight, but you do need to assume that HMRC will soon expect better, more regular information on how you pay yourself and so do plan accordingly.

Get to Know your Personal Tax Account

Tue, 10 Feb 2026 14:16:20 GMT

Get a step by step guide to your Personal Tax Account

Take Control of your Taxes

Taxpayers should not assume that your code and your tax are automatically correct. It has been reported that HMRC is holding on to £billions in taxes that are overpaid by people who don't know or understand how to calculate their own taxes.

The solution is to use your Personal Tax Account to take control of your taxes, because HMRC isn't there to do it, it is now just a collector, the rest is up to you, if you don't engage a tax advisor.

It's good news is that HMRC has given every individual taxpayer a powerful free tool to keep an eye on their tax – the Personal Tax Account, but that means it has wiped it's hands of making sure your taxes are correct...the message is, it is up to you.....

Through your Personal Tax Account, you can:

Check your current Income Tax estimate and tax code.

Amend your tax code to refund overpaid tax in the current tax year

See how much tax you've paid and your income from work for the last 5 years.

Claim a tax refund if you think you've overpaid.

View and manage your Self Assessment (if you're registered).

Check your State Pension forecast and National Insurance history.

You access it by signing in using your Government Gateway details, or by creating them if you've never had them before. When you sign in, HMRC may ask you to prove your identity using photo ID such as a passport or driving licence – this is to keep your data secure, and here is the crucial mindset shift: your Government Gateway ID is as important as your online banking login. It should be:

Written down somewhere safe, or stored securely in a password manager.
Kept up to date (email and mobile number particularly).
Used regularly enough that you stay familiar with the system.

Summary

If you only log in once a year and forget your ID, the hassle of recovering access can put you off checking what's going on. That is exactly how overpayments and underpayments are allowed to carry on in the background for years. So I've been recommending for a long time that every UK taxpayer should;

Set up their Personal Tax Account (if they haven't already).
Log in at least a couple of times a year – for example, after the tax year ends in April, and again in the autumn.
Check that their tax code, income figures and benefits in kind look sensible.
Use the refund process or contact HMRC if something doesn't look right.

Download a Step by Step Guide here

Is HMRC Holding on to Your Cash?

Fri, 06 Feb 2026 17:39:58 GMT

HMRC is Sitting on Billions of UK Taxpayer Money

Are You One of the Millions Quietly Overpaying Tax to HMRC?

Every year in the UK, millions of ordinary workers, employees and pensioners pay the wrong amount of tax, often without realising it for years. Recent analyses suggest that taxpayers have overpaid billions of pounds in Income Tax through mistakes in tax codes and PAYE calculations.

Behind those big numbers are real people on PAYE who simply trust that "HMRC must have got it right" – until a letter, or a surprise tax refund, proves otherwise.

HMRC's own guidance confirms that if you've paid too much or too little by the end of the tax year, it has to issue a tax calculation – either a P800 or a "Simple Assessment" – to tell you about refunds or underpayments. These calculations are usually issued between June and the following March and mainly go to people who are employed or receiving a pension, not to everyone. If you are in Self Assessment, there is no P800 at all – HMRC just adjusts your bill within the online system. So it is perfectly possible for a PAYE taxpayer to be on the wrong code, pay too much tax for years, and only discover it much later.

How do these overpayments happen?

HMRC lists a number of common triggers for a "tax calculation" letter, and they are all very ordinary life events.

- You were put on the wrong tax code because HMRC had incomplete or outdated information about your income.

- You changed jobs, or had two jobs at once, and were paid by both in the same month.

- You started receiving a workplace or private pension.

- You received certain state benefits such as Jobseeker's Allowance or Employment and Support Allowance.

- You recently moved from self-employment to employment.

Individually, none of these feels like a tax problem – they're just normal changes in work or retirement. But the PAYE system depends on HMRC holding the right information at the right time, and if your code is wrong, your employer or pension provider simply follows that wrong code. Month after month, the wrong amount of tax is taken from your pay, and you may be none the wiser.

Multiply that across millions of taxpayers and it's easy to see how over £3 billion of over(and under)payments can build up quietly in the background in a single tax year. Some of those overpayments are eventually refunded, but a significant amount may never be reclaimed because taxpayers don't check or don't understand that they can challenge what HMRC's systems have produced.

The quiet shift to "digital by default"

There's another trend that makes this more worrying: HMRC's rapid move to digital communication. Over the last few years, more and more services have moved online, and the Personal Tax Account is now the main route for individuals to see their records and messages. Once someone has signed in online even once, HMRC can treat that as a signal that they can be contacted electronically – through the secure message inbox in their Personal Tax Account, not necessarily by post.

The problem is many any people:

- Sign in once because they were prompted or needed a one‑off form.

- Don't really understand what the Personal Tax Account can do.

- Forget their Government Gateway user ID and password by the time they need it again.

So HMRC may send an electronic message about a tax code change or a calculation, but the taxpayer never sees it, because they rarely (or never) log back in. If they've effectively gone "paperless" without realising, they might not get a physical P800 through the post at all, even where there's an over‑ or under‑payment.

This gap between HMRC's digital expectations and taxpayers' actual habits is one of the reasons I've been urging people for years – in my professional articles and on LinkedIn – to treat their Personal Tax Account like online banking. In earlier pieces aimed at agency workers and umbrella employees, I've consistently advised readers to use their Personal Tax Account to check income and tax, rather than assuming HMRC always gets it right.

I recently commented on an article aimed at contractors and umbrella workers, warning that HMRC could be charging billions too much tax through coding and assessment errors. You can read that article here:

https://www.contractoruk.com/news/contractors-warned-over-hmrc-charging-ps35-billion-too-much

The figures focus on contractors and off‑payroll workers, but the underlying message applies to anyone paid under PAYE: Please do not assume that your code and your tax are automatically correct. Get control of your Personal Tax Account and take control of how much tax you pay.

Follow this link to access your Personal Tax Account... https://www.gov.uk/personal-tax-account

MTD - The Real Cost

Sat, 17 Jan 2026 10:51:10 GMT

A combined digital platform plus accounting support for just £10 per week.....

Making Tax Digital: The Real Monthly Cost

If you’re a small business owner in the UK, Making Tax Digital (MTD) means you need digital records and timely digital submissions. That can create two separate costs you should plan for — the accounting software subscription and the managed bookkeeping/accountancy service. Here’s the clear breakdown so you can budget with confidence.

Xero (software): £16 per month + VAT — this is the platform for digital records
Oblako (accounting support service): £20 per month + VAT — checking quarterly MTD returns and one annual self-assessment tax return.

If you choose both, the combined monthly cost before VAT is £36 per month, giving you the software and the accounting support required to meet MTD obligations.

What you get;

Xero (£16 + VAT): digital accounting platform, file MTD returns, bank feeds, invoicing, cash flow reports and records storage.
Oblako (£20 + VAT): dedicated bookkeeping service. We make sure that your books are MTD-ready, file quarterly MTD returns on your behalf, and include one annual self-assessment tax return.

Why this package is a good deal?

Predictable, fixed monthly cost: £16 + VAT (software) + £20 + VAT (service) = £36 + VAT per month — easy to budget.
Peace of mind: filings done on time and correctly, freeing you to run the business.
Avoid paying variable accountancy fees for routine bookkeeping and MTD returns which can be far more when those tasks are billed hourly or per-return.

Quick cost comparison;

DIY with software only: £16 + VAT/month — but you still need to find time to prepare your own books and submit returns
Traditional accountant packages: often £50–£200+/month depending on complexity — for similar bookkeeping + filing services.

Who this is best for?

Micro and small businesses that need full MTD compliance without variable accountancy bills
Business owners who prefer to outsource bookkeeping and filing to experts
Business owners who want a fixed monthly cost

So, what is the true cost of managing MTD?

The cost of a combined digital accounting platform with accounting support is just £10 per week. If that sounds interesting and is within your budget, why not get in touch for a quick demo? We look forward to hearing from you.

#MakingTaxDigital #MTD #SmallBusiness #Bookkeeping #Xero #Oblako #Accounting

Five Big Things to Know about MTD and CIS

Thu, 27 Nov 2025 16:17:36 GMT

How are the New MTD Rules Going to Affect CIS Subcontractors?

This is a summary of what you will learn about MTD and CIS

You will need to register and buy a compatible software subscription.
You will use an app (iPhone or Android) to send invoices, log receipts for purchases etc.
Your banking transactions will upload automatically into your app.
Your CIS will be automatically accounted for within the app.
You will spend a few hours per month logging invoices and receipts, but less time at the end of the year when your personal tax return is due, this is because all the figures will be at hand.

Timelines

MTD requirements starts;
6th April 2026 for people earning over £50,000 per year }
6th April 2027 for people earning over £50,000 per year } from self-employment or property, or self-employment and property.
6th April 2028 for people earning over £50,000 per year }

Essentials that you need to know

You need to register your UTR with HMRC to submit returns under MTD before your due date.
You need to subscribe to one of the many MTD compatible accounting softwares that are available.
All compatible software comes in app form so you can manage MTD from your phone.
Choose software that has been recommended by someone you trust.
Using the software, your banking transactions will upload automatically and will recommend how to record each income or spend.
You’ll enter use your email address to log in, and you will send your invoices from a template provided with the software by email.
You will enter your UTR and the system will automatically account for CIS deductions depending on whether you have Gross Payment Status or the standard 20%.
When you receive a payment, the system will treat an invoice as paid and record the CIS deduction suffered as an asset, which means amounts that are owed to you by HMRC.
You must upload pdfs of the invoices you receive (if they are sent by email to you) otherwise a scanned image will do. Attaching a photo of your receipts taken from your phone is also possible..
You attach a proof of purchase to the payment in your banking transactions by clicking on it in the app. This is essential; too many missing receipts will cause issues with HMRC.

Submitting returns under MTD

You will need to submit a report to HMRC four times a year and these are compiled automatically within the app. You have a chance to check each one before submitting it. The app will prompt you to do this in good time.

You will need to submit your annual personal tax return to HMRC as usual, this requirement doesn’t change.

HMRC states that MTD will speed up tax rebates at the end of the year as MTD should make it much easier for HMRC to process CIS deductions- in theory.

Cost

You can manage MTD:- a, yourself, b, with someone checking the submissions to HMRC before you send them, or c, you can hand it over to an accountant.

For DIY MTD management it’s free, for a quarterly 'health-check' service before you submit a return, it’s £120 per year (£30 per quarterly report).

Accountants will charge between £300 and £500 per year. Book-keepers charge about £250 per year.

Your time is a cost factor but after the initial set up it should take less than an hour a week to complete necessary tasks, and then no time at all at the end of each year, because you will have all the figures/receipts for your annual personal tax return to hand.

Software

There are free apps that come with certain bank accounts, Mettle is one of them, but they are scaled down versions of a standard accounting package and may not suit everyone.

For £7 per month plus VAT you can subscribe to a simple version of a standard accounting package like Xero, which is missing no functionality. (There is no need for anything more expensive than this, because the full versions are designed for VAT registered businesses, or businesses that employ people and you won’t need any of these extra functionalities.)

CIS Payroll companies may provide access to some kind of a service, but in my opinion it is better to manage MTD/CIS independently.

Why not take a look at my other blog posts, they may not be specific to the construction industry, but they explain MTD in more detail.

Any questions??? Contact me the usual way or using this contact button -

Why is HMRC Pushing Small Business to go Digital?

Mon, 24 Nov 2025 14:56:52 GMT

What's behind the biggest overhaul in the UK tax system?

Why Is HMRC making most small business taxpayers adopt digital accounting?

Looking at it from HMRC's point of view, it makes sense, The UK tax gap for 2023–24 is estimated at £46.8 billion , which represents 5.3% of the tax that should theoretically be collected . That’s a huge shortfall—and HMRC’s latest data shows that small businesses account for around 60% of this gap , or roughly £28 billion .

Most of this gap comes from Corporation Tax, VAT, and self-employment business taxes . To put it in perspective, small company Corporation Tax alone makes up £14.7 billion , about half of the small business tax gap. The remainder is mainly split between VAT losses and undeclared or under-declared income from self-employment and property.

What’s Driving the Tax Gap?

HMRC breaks the tax gap down by behaviour, and small business non-compliance dominates several categories:

Failure to take reasonable care : About 31% of the overall gap , often due to poor record-keeping and filing mistakes.
Error : Around 15% , again concentrated among businesses with weak systems or limited understanding.

Combined, these two causes account for 46% of the gap , far outweighing deliberate tax evasion—which HMRC tackles through separate measures.

Why Digital?

To close this gap, HMRC is extending Making Tax Digital (MTD) as it increases compliance by reducinig errors and providing real time tax information. HMRC is dead against people who don't ring fence tax money leaving them unable to pay their tax liabilities. Digitalisation enables taxpayers to take more control of their company finances, and allows HMRC to track exactly what they are doing through AI and other digital programmes.

For small companies, expect more targeted “nudge” messages when digital records, VAT returns, or Corporation Tax filings look inconsistent with sector norms or digital returns are lacking sufficient links to the company's receipts and invoices - A pdf or jpeg is a digital document, and is all it takes to keep accounts 'looking good' to HMRC.

How should small businesses prepare

Strong digital systems will be your best defence against enquiries and penalties. Here’s what to focus on:

Maintain accurate digital records and reconcile VAT and bank data.
Document VAT and payroll controls .
Keep clear evidence for expense and relief claims .

For incorporated or limited companies, review these areas before year-end:

Contractor relationships
Director loan accounts
Benefits and dividends

These steps will help ensure your Corporation Tax and PAYE positions stand up to the more intensive compliance activity expected from 2026/27 .

Why is HMRC pushing nearly all Small Business to go Digital??

Mon, 24 Nov 2025 14:51:44 GMT

Here is what is causing one of the biggest tax overhauls...

Why Is HMRC making most small business taxpayers adopt digital accounting?

What’s Driving the Tax Gap?

HMRC breaks the tax gap down by behaviour, and small business non-compliance dominates several categories:

Failure to take reasonable care : About 31% of the overall gap , often due to poor record-keeping and filing mistakes.
Error : Around 15% , again concentrated among businesses with weak systems or limited understanding.

Combined, these two causes account for 46% of the gap , far outweighing deliberate tax evasion—which HMRC tackles through separate measures.

Why Digital?

How should small businesses prepare

Strong digital systems will be your best defence against enquiries and penalties. Here’s what to focus on:

Maintain accurate digital records and reconcile VAT and bank data.
Document VAT and payroll controls .
Keep clear evidence for expense and relief claims .

For incorporated or limited companies, review these areas before year-end:

Contractor relationships
Director loan accounts
Benefits and dividends

These steps will help ensure your Corporation Tax and PAYE positions stand up to the more intensive compliance activity expected from 2026/27 .

Nine Things a Small Business Owners Needs to Know

Sun, 23 Nov 2025 14:32:32 GMT

9 Questions a Small Business Owner should ask about their Balance Sheet

9 Essential Balance Sheet Questions Every Small Business Owner Should Ask

Why Your Balance Sheet Matters

Your balance sheet isn’t just a compliance document—it’s a snapshot of your company’s financial health. For small business owners, understanding it can reveal risks, opportunities, and strategies for growth. But where do you start? By asking the right questions.

1. What do my total assets and liabilities say about my company’s net worth and overall financial stability?

Your assets and liabilities determine your business’s value. Understanding this helps you assess whether you’re building wealth or accumulating risk.

2. How has my equity changed over time, and what does that mean for the business?

Equity reflects ownership value. Tracking changes can show if your business is growing sustainably or facing challenges.

3. Are there any notable trends when comparing current balance sheets with previous periods?

Spotting patterns—like rising debt or shrinking cash reserves—can help you act before problems escalate.

4. How does my liquidity look—do I have enough current assets to meet short-term obligations?

Liquidity is vital for smooth operations. Ask if your current assets cover upcoming bills and expenses.

5. What is the current ratio (current assets ÷ current liabilities), and is it healthy for my industry?

This ratio measures your ability to pay short-term obligations. Your accountant can compare it to industry benchmarks.

6. Are any accounts receivable or accounts payable long overdue, and what risks do those pose?

Late payments can strain cash flow and damage supplier relationships. Address these early.

7. What steps can improve liquidity or reduce financial risk based on this balance sheet?

Your accountant can suggest strategies like renegotiating payment terms or cutting unnecessary costs

8. How does this balance sheet compare to industry benchmarks or competitors?

Benchmarking helps you identify strengths and weaknesses relative to others in your sector.

9. Which numbers on the balance sheet are most critical, and are there warning signs?

Not all figures matter equally. Your accountant can highlight the metrics that impact your business most.

Turn Your Balance Sheet Into a Growth Tool

Asking these questions transforms your balance sheet from a static report into a strategic resource. It’s not just about where you are today—it’s about planning for tomorrow.

Three Steps to Company Director ID Verification

Sun, 23 Nov 2025 12:33:11 GMT

Read our earlier Blog - Company Director ID Verification or simply follow these three steps

Company Directors

The 18th November 2025 marks the start of a transition period. You will need to complete steps 1,2 and 3 before you can file subsequent documents at Companies House. Don't leave it too late because you risk a fine if you (or your accountant) fail to file returns and statements in the coming year.

Don't be concerned - it really is a simple process and you need a verified government account for dealing with various other government departments.

The three steps to verifying your identity to meet new Companies House requirements are....

1. Go to https://www.gov.uk/guidance/verify-your-identity-for-companies-house

2. Set up Gov One Account and verify your identity as the company director, when complete, go to manage account and keep note of your personal code

3. Go to https://www.gov.uk/guidance/provide-psc-verification to verify your identity as the Person with Significant Control and take note of the window in which you need to complete this step

Tip: You will find your personal code under Manage Accounts

Top Ten Accounting Terms

Fri, 21 Nov 2025 10:43:54 GMT

10 Key Accounting Terms

Understanding the key accounting terms will help you to get the most out of your accounting process and to figure out the best way to reconcile your transactions (analyse and record payments from the bank statement to your accounts).

10 Key Accounting Terms

Debit: Represents an increase in asset and expense accounts, or a decrease in liability, equity, and revenue accounts..
Credit: Represents an increase in liability, equity and revenue accounts, or a decrease in asset and expense accounts.
Assets: Resources with a monetary value that a company owns, such as cash, accounts receivable, and property.
Depreciation: The reduction in value of an asset over the period of its useful life
Liabilities: Amounts that a business owes to others, including accounts payable, loans, and wages.
Equity: The value of a company left over after all liabilities are subtracted from all assets.
Revenue: The total amount of income generated from a business's operations.
Expenses: The costs a business incurs to generate revenue.
Balance Sheet: A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
Profit and Loss Report : A statement that summarises income and lists expenditure, then calculates the profit or loss over a specific period.

Company Director ID Verification

Fri, 21 Nov 2025 10:20:21 GMT

Step by Step Guide to ID Verification

Company directors and Persons with Significant Control (PSCs) must verify their identity before the next annual confirmation statement after 18 Nov 2025.

The director(s) should verify first and then the Person with Significant Control has a window of 14 days in which to verify and that applies where director and PSC are the same person.

Here is a simple step by step guide;

✅ 1. Understand Who Needs to Verify

You must verify your identity if you are:

A company director (including overseas directors of UK companies)
A Person with Significant Control (PSC) (owns or controls >25% of shares or voting rights)
A company secretary
An Authorised Corporate Service Provider (ACSP) filing on behalf of others
Anyone who files information for a company (e.g., managing officers)

✅ 2. Prepare Before You Start

Gather:

Photo ID : UK passport, UK driving licence, or other accepted government-issued ID
Proof of address (sometimes required): utility bill or bank statement
Personal details : email address, home address, date of birth
A mobile phone and computer/laptop for the process

✅ 3. Choose How to Verify

There are three official methods :

Online via GOV.UK One Login (recommended, free)
Using the GOV.UK One Login app (scan passport chip and upload ID)
In person at a participating Post Office (requires prior setup online)
Alternatively, you can use an Authorised Corporate Service Provider (ACSP) , such as an accountant or solicitor, but this may incur a fee

✅ 4. Steps for GOV.UK One Login Verification

Step 1: Go to Verify your Identity at Companies House
Step 2: Confirm you have an accepted photo ID
Step 3: Create a GOV.UK One Login account Enter your email → receive a 6-digit code → verify email
Step 4: Set a secure password
Step 5: Enable two-factor authentication (usually via SMS or app)
Step 6: Enter your personal details (name, DOB, address)
Step 7: Upload your ID documents or scan via the app
Step 8: Complete security checks and submit

✅ 5. After Verification

You’ll receive a Personal Unique Identifier Code (e.g., XY1-Z000-0000)
Keep this code safe—it links your verified identity to your company roles
Share it with your accountant or agent if they file on your behalf

✅ 6. Deadlines & Compliance

New directors/Person with Significant Control (PSC) : Verify within 14 days of appointment
Existing directors/PSCs : verify before your next annual confirmation statement after 18 Nov 2025, directors should verify first and then the PSC has a window of 14 days in which to verify (where director and PSC are the same person the same rules apply) Go to.. https://www.gov.uk/guidance/provide-psc-verification
Failure to verify can lead to penalties, filing restrictions, or disqualification