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What are corporation tax late filing penalties?

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What are corporation tax late filing penalties?

Reviewed: 19th April 2017

Corporation tax late filing penalties are applied when companies fail to file their Company Tax Return by the official deadline. Even if it is only one day late, you will receive a fine of £100 from HMRC.

Penalties then increase over time, and can damage your company’s reputation with HMRC. If the situation is not well-managed, it can even cause your business to fail. So what penalties do you face for late filing, and what can you do to bring the situation back under control?

Late filing penalties for corporation tax

As we said earlier, an initial penalty of £100 is applied if the tax return is a single day late. The usual filing deadline is 12 months from the accounting year-end. From then on the following penalties come into force:

  • 3 months late: £100
  • 6 months late: 10% of the unpaid amount (estimated by HMRC)
  • 12 months late: 10% of unpaid tax

If you have missed the deadline three consecutive times, the financial penalties increase to £500 each for filing your tax return one day late and three months late, and the 10% surcharge applies to any unpaid tax after 6 months and 12 months.

How HMRC deals with late filing and payment

If the payment deadline has passed, you need to contact HMRC as soon as possible, otherwise they may take legal action against your company. You will be asked about various aspects of your company, including its level of assets and liabilities, income and expenditure, to help them decide whether or not you can pay straight away.

If they feel that your company cannot pay the arrears straight away, but that given a little more time you can meet your liability for corporation tax, you may be able to negotiate a Time to Pay arrangement.

What is a Time to Pay (TTP) arrangement?

This is an instalment plan that generally lasts around six months, but can be shorter or longer in duration depending on each company’s circumstances. When negotiating the terms of a Time to Pay arrangement, it is crucial to ensure that you can afford the instalments for the whole term.

If you renege on this type of agreement, HMRC are likely to demand the debt in full, and take legal action if the money is not forthcoming immediately. It can be a delicate balance, therefore, between obtaining more time to pay and ensuring that you can definitely meet their conditions of repayment.

You will also need to provide documentary evidence to support your proposed repayment figures.

Professional help with negotiations

Real Business Rescue has a long and successful track record of dealings with HMRC, and negotiating Time to Pay agreements on behalf of clients. Our involvement removes much of the stress for directors, and can help your company recover from a temporary financial setback without it resulting in liquidation.

We have an extensive network of 55 offices offering confidential director support across the UK.


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