Corporation Tax Penalties & Fines

Corporation tax penalties occur when you haven’t filed your tax on time or if you have provided inaccurate information to HMRC. The amount you have to pay depends on how late you are to file or if they believe the inaccurate information was deliberate or not. We’ve got a guide on everything you need to know about corporation tax penalties here.

What penalties can HMRC charge me?

HMRC can charge you a penalty for a few different reasons:

  • Submitting a tax return or paperwork late
  • Failure to tell HMRC about changes that affect tax liability
  • Errors on a tax return, payment or other paperwork that misrepresents your tax liability

What are the penalties for filing corporation tax late?

Corporation tax is due 12 months after the end of the year. You will have to pay corporation tax filing penalties if you file your taxes late. What you pay depends on how late you are to file your taxes. Of course, they get progressively more expensive as time goes on.

Time after filing deadlinePenalty fee
1 day£100
3 monthsAn additional £100
6 months10% of the unpaid tax will be charged to you – HMRC will estimate your Corporation Tax bill to find this amount
12 monthsAn additional 10% of unpaid tax

NOTE: if your tax returns are late 3 times in a row, the £100 charges will instead increase to £500.

What is a reasonable excuse for filing corporation tax late?

Sometimes, unexpected things get in the way of us filing our taxes in time. There are some instances in which paying your corporation tax late or missing the deadline is out of your control – these are called reasonable excuses.

After your reasonable excuse has been accepted by HMRC, it’s important to pay what you owe. Here are some extenuating circumstances which prevented you from paying corporation tax on time:

  • You had a serious illness or were unexpectedly in hospital which prevented you from paying your tax
  • Your partner or close relative died just before the tax deadline
  • There was a software failure that prevented you before or during paying your tax
  • There were issues with HRMC online services
  • Unexpected postal delays
  • You relied on someone to deal with your tax affairs and they didn’t
  • Circumstances like a flood, fire, or theft
  • Mental or physical disability or illness that delays your tax returns
  • You were unaware of your legal tax obligation

What happens if a failure to file your tax is not deliberate?

You must tell HMRC about a new source of taxable income if you qualify to pay tax on them. The amount of a failure to notify penalty is calculated on the potential lost revenue and HMRC will look at the information presented to them and decide whether your failure to pay the right amount of tax (i.e., failure to notify) is deliberate or not. The outcome of this will determine how much corporation tax penalty you will pay.

Type of failure to notifyMaximum penalty to pay
Non-deliberate30% of lost revenue potential
Deliberate but not concealed70% of lost revenue potential
Deliberate and concealed100% of lost revenue potential

How do I pay my HMRC corporation tax penalties?

You can pay your corporation tax filing penalties by debit/credit card, online/telephone banking, cash at the bank or cheque in the post. You will have a payment reference on your penalty notice and this information should be included. Delays are possible if you do not include this information.

For further information on how to pay your corporation tax penalty, the UK Government website has all of the specific details.

What are the corporation tax late payment penalties for small businesses?

We know that filing tax late means you will be penalised, but what about paying corporation tax late? For the small businesses, the payment of tax is due 9 months and 1 day after the year end. There’s no penalty for missing this deadline but HMRC will start to charge interest after this point. This interest is usually about 3% of the outstanding balance.

How can Accountancy Solutions help with filing corporation tax?

Your corporation taxes are due to be filed with Companies House 9 months after the year end. Our accountants can help you with HMRC and Companies House Compliance. Take the stress out of filing corporation tax and contact our team at SixtyFour8 for more information.

We hope this guide on corporation tax penalties was helpful! Next, see our guide on how we contact HMRC on your behalf.