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Corporation Tax – HMRC Late Filing Penalties

Author

Ryan Conlon

Ryan qualified as a Chartered Tax Adviser with a Big Four firm before continuing his tax career at national firms and HMRC’s Fraud Investigation Service.

Corporation Tax, HMRC & Late Filling Penalties – Introduction

Corporation tax is due on the profits arising to UK limited companies and foreign companies with UK branches or offices. It is also due on trading profit, investment income and gains arising to clubs, cooperatives and other unincorporated associations such as community sports clubs.

Companies and other bodies liable to UK corporation tax and must report their chargeable income and allowable expenses to HMRC on a company tax return.

The return comprises:

  • A completed company tax return (Form CT600);
  • The company’s accounts;
  • Computations showing how the figures on the Form CT600 have been derived from the accounts.

The company may also need to complete and submit supplementary pages accompanying the CT600.

Deadlines for Company Tax Returns

The company tax return must be submitted to HMRC by the filing date which is the later of:

  • 12 months from the end of the period for which the return is made;.
  • 3 months from the date on which the notice to deliver was served;
  • 12 months from the end of the company’s relevant period of account, if it is not longer than 18 months;
  • 30 months from the start of the company’s relevant period of account, if it is longer than 18 months.

Usually, the deadline will be 12 months from the end of the period for which the return is made.

Late filing penalties for Company Tax Returns

If the company tax return is late, HMRC will impose penalties for missing the deadline. The penalties imposed will depend on how late.

If the company tax return is filed after the due date, then the company will incur a late filing penalty of £100. If the return is 3 months late, it will incur an additional £100 filing penalty. Should a company’s tax return be late three times consecutively, HMRC will increase the £100 penalties to £500 each.

Should the company tax return be 6 months late, HMRC will issue a tax determination, estimating the corporation tax liability and calculate a further penalty of 10% of the unpaid tax. If the return is outstanding after 12 months, HMRC will calculate a further penalty of 10% of any unpaid tax. Such tax determinations cannot be appealed and instead the outstanding tax returns will need to be prepared and submitted to HMRC. Once the outstanding returns have been filed, HMRC will recalculate the tax, interest and penalties that are due.

Penalties can be appealed if the company has a reasonable excuse for the late filing of its return.

Late payment of corporation tax liabilities

The deadline for paying corporation tax liabilities is different and is 9 months and one day after the end of the accounting period unless the company falls within the quarterly corporation tax payment regime. Generally, companies with profits in excess of £1.5 million are subject to the quarterly payment regime.

HMRC does not impose late payment penalties for corporation tax (unlike for income tax and capital gains tax) but interest is charged on late paid tax. However, if a company is within the quarterly corporation tax payment regime there are potential penalties for deliberate failure to pay or making payments that are too small.

For more info on late filling penalties and charges or to talk to one of our helpful team of tax advisers simply use the contact page, or be sure to check out more about HMRC below…

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