SME Accounting News & Deep Dives: Corporate Reporting Overhaul Consultation, Distributions Deadline & the £30,000 MTD Wave

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Monday 14 September 2026 edition | Author: Sam

For limited companies and growing SMEs, this week brings proposed changes to corporate reporting, a final opportunity to respond to HMRC’s distributions consultation and important reminders about Making Tax Digital.

The common theme is preparation. Whether you are reviewing dividends, planning a restructuring or checking whether your personal business income will bring you into the next MTD wave, the right advice can help you avoid costly decisions.

If you have been searching for an accountant near me, Accountant Search can help you compare suitable advisers through its curated directory and digital matchmaking/referral platform.

1. Corporate reporting overhaul: potentially lighter rules for medium-sized companies

The government launched its Modernising Corporate Reporting consultation on 7 September 2026. Responses are due by 30 November 2026.

The consultation proposes a wide-ranging reset of the UK corporate reporting framework. The government wants annual reporting to be clearer, more proportionate and better suited to digital filing.

For growing SMEs, three proposals stand out.

Medium-sized companies could gain audit exemptions

The government is considering extending existing small-company audit exemptions to some medium-sized companies.

If introduced, qualifying medium-sized businesses could have the option of preparing accounts without a statutory audit. This could reduce costs and administration, although lenders, investors or other stakeholders may still ask for audited information as a commercial condition.

The proposal may be attractive to businesses that have grown beyond the small-company threshold but do not have complex reporting requirements. However, an audit exemption would not necessarily mean that a business can stop maintaining detailed financial records or management information.

Subsidiary audit exemptions could become simpler

The consultation also considers changes for subsidiaries.

At present, some subsidiaries can rely on an audit exemption connected to a parent company guarantee. The proposed approach could remove the need for that guarantee in certain circumstances, potentially allowing a subsidiary to qualify by filing the parent company’s audit report with its own accounts.

The precise conditions still need to be decided. Groups with several UK companies should monitor the consultation because the final rules could affect audit planning, group reporting and the cost of preparing subsidiary accounts.

Dividends could move to a solvency-based test

One of the most significant proposals is a possible move away from the current distributable profits regime towards a solvency-based approach for dividends.

Under the proposed model, directors would confirm that a dividend payment would not threaten the company’s ability to continue as a going concern. This would place greater emphasis on forward-looking cash flow, liabilities and the company’s financial resilience.

That could create more flexibility in some circumstances, but it would also increase the importance of a properly documented board decision. Directors would need to consider whether the company can meet its debts after the payment, not simply whether there is cash in the bank on the day.

These are proposals, not law. Current filing requirements, audit rules and dividend requirements remain unchanged. Do not change your company’s reporting or dividend process solely because the consultation has been published.

The proposals also connect with wider Companies House digital reforms, including the expected move towards iXBRL filing from April 2028.

2. HMRC distributions consultation closes today

HMRC’s consultation on modernising the taxation of distributions and repayments of capital from companies closes today, 14 September 2026.

The consultation looks at how payments to shareholders and other extractions should be taxed. Areas under review include:

• Capital reductions and repayments of capital.
• Share buy-backs.
• Holding company structures.
• Demergers.
• Distributions from non-UK companies.
• Loans from non-UK close companies.
• The interaction between distributions and loans to participators.
• The Purchase of Own Shares and Transactions in Securities rules.

The proposals could affect how some shareholders obtain capital treatment when value is extracted from a company. HMRC is particularly examining structures where a new holding company is inserted before a capital reduction or other transaction.

It is also considering tighter or more mechanical conditions for share buy-backs that receive capital treatment. This could be relevant to shareholder exits, management buy-outs, succession planning and group reorganisations.

Action point for directors

If your company is considering a dividend, capital reduction, share buy-back, demerger or restructuring, ask for advice before signing documents or transferring shares.

Prepare a short summary of:

1. The proposed transaction.
2. The shareholders and companies involved.
3. The expected payment or transfer of value.
4. Any holding-company or overseas structure.
5. The intended tax treatment.
6. The commercial reason for the transaction.

A specialist adviser can then assess the position under the rules currently in force and explain whether the consultation proposals create a future risk. The consultation itself does not change the law today.

Businesses looking for corporation tax accountants should choose advisers who understand both company tax and shareholder-level tax. These are not always the same question.

3. MTD for Income Tax: lessons from the first quarterly updates

The first quarterly updates under MTD for Income Tax have highlighted a practical issue: digital record-keeping must happen throughout the year, rather than being recreated shortly before a deadline.

HMRC continues to auto-enrol eligible taxpayers who have not signed up during the current rollout. Company directors and SME owners with additional self-employment or property income should check whether they are affected personally, even if their main business operates through a limited company.

The next major wave begins on 6 April 2027 for individuals whose qualifying self-employment and property income is over £30,000, based on their 2025/26 figures.

For the new cohort:

• Digital records will need to be maintained.
• Quarterly updates will need to be sent using compatible software.
• The first standard quarterly period will normally run from 6 April to 5 July 2027.
• The first update is expected to be due by 7 August 2027.
• Penalty points are expected to apply from April 2027.

The key practical lesson is not to wait until 2027. Start separating business and personal records now, check whether software is suitable and make sure expenses can be supported by invoices and receipts.

4. SA102 close-company boxes: zeros must be entered

HMRC has clarified its position on the new close-company director reporting requirements following an ICAEW update published on 11 September 2026.

For the 2025/26 tax return onwards, directors of close companies may need to complete the additional SA102 boxes, including boxes 7.1 to 7.4.

This requirement can apply even if the director:

• Received no salary.
• Received no dividends.
• Held no shares.
• Was unpaid.
• Was a director of a dormant close company.

Where the boxes apply, the director should enter the company name and registration number, report dividends received and provide the highest percentage shareholding during the tax year.

If no dividends were received, enter 0 in the relevant box. If no shares were held, enter 0 for the shareholding. Leaving the fields blank can be treated as missing information.

A £60 penalty may apply per return where the close-company information is not provided correctly. HMRC’s clarified position is that this is one penalty per return, rather than £60 for every box or every directorship.

Directors with several companies should review each directorship separately and make sure the company and personal records agree.

You can read more in our 9 September SME Accounting News & Deep Dives edition.

5. Autumn Budget and the next reporting deadline

The Autumn Budget is scheduled for 28 October 2026.

Until the Budget is delivered, avoid changing dividend, investment or remuneration plans based on rumours. Instead, prepare a cash-flow forecast showing:

• Corporation Tax and VAT payments.
• PAYE and pension costs.
• Planned investment.
• Director remuneration.
• Proposed dividends.
• The cash reserve remaining after each decision.

This gives your adviser a reliable base for responding to confirmed announcements.

For wider context, our 4 September SME Accounting News & Deep Dives edition covered the distributions consultation, Corporation Tax penalties and the Autumn Budget timetable.

SME action checklist

This week, limited companies and growing SMEs should:

• Note the 30 November 2026 deadline for the corporate reporting consultation.
• Keep current filing and audit processes unchanged until proposals become law.
• Review whether a medium-sized company or subsidiary could benefit from future audit reforms.
• Obtain advice before approving a capital reduction, share buy-back or complex distribution.
• Check whether director income could bring them into the £30,000 MTD wave from April 2027.
• Review digital bookkeeping software and expense records.
• Complete SA102 close-company boxes 7.1 to 7.4 where required.
• Enter zero rather than leaving dividend or shareholding boxes blank.
• Prepare cash-flow forecasts ahead of the 28 October Autumn Budget.
• Compare suitable accountants for small business if your current adviser does not cover corporation tax, dividends and MTD.

Self-Assessment tick-box: Confirm whether you are a director of a close company, complete the relevant SA102 boxes for every applicable directorship, enter 0 where there were no dividends or shares, and check your personal return against the company’s dividend records.

SA registration form

If you need help with a director’s return, close-company reporting or MTD preparation, complete the SA registration form through our Self-Assessment accountant service.

You can also use our limited company accountant service or find an accountant near me page to provide your details and compare suitable advisers.

Accountant Search is a curated directory and digital matchmaking/referral platform, not an accountancy practice. We help limited companies and growing SMEs find a suitable business accountant UK businesses can work with locally or remotely.

For a Self Assessment deadline reference, see the GOV.UK Self Assessment deadlines page.

This article is for general information only and reflects the position understood on 14 September 2026. Consultations are proposals and may change before legislation is introduced. Tax rules, filing requirements and Budget measures can change. Obtain professional advice before making a distribution, restructuring a company or submitting a tax return.