What are HMRC’s Corporation Tax Penalties?

Corporation tax is the standard tax on business profit paid all limited companies.

In this article we’ll explore what penalties accrue if you file late, or fall into arrears

Corporation Tax Penalties

Late Filing Penalty for Corporation Tax

The first penalty we’ll discuss is the late filing penalty. While there is no fixed date when a company must file its annual return they must do so every 12 months.

Usually you will receive due warning of this via HMRC’s letter ‘ Notice to deliver a Company Tax Return.’

If you’re even a single day late you should expect a £100 immediate penalty. The penalty structure is as follows:

  • 1 day late: £100 penalty
  • 3 months late: An additional £100 penalty charge
  • 6 months late: 10% of the unpaid amount
  • 12 months late: A further 10% penalty of any unpaid tax

For those that have missed the deadline 3 times:

  • 1 day late: £500 penalty
  • 3 months late: An additional £500 penalty charge
  • 6 months late: 10% of the unpaid amount
  • 12 months late: A further 10% penalty of any unpaid tax

HMRC Corporation Tax Determination

If you’re more than 6 months late with filing your CT600 corporation tax self-assessment return, HMRC will make a determination of how much they think you owe.

This will be based on the information available to it, perhaps using comparable businesses as a benchmark.

Issuing a determination gives HMRC the power to commence formal debt recovery proceedings if they wish, and there is no appeals process.

Your choices are simply to pay what you owe, or file a return.

Other Late Corporation Tax Penalties

Penalty for Not Informing HMRC of Your Eligibiity For Corporation Tax

The ‘Failure to Notify’ penalty is based on a calculation of the amount of unpaid tax HMRC are owed.

How much this turns out to be depends on whether HMRC deem the failure to be careless, deliberate or concealed.

Based on their conclusions the penalties are as follows:

Type of FailureMaximum Penalty Payable
Non-deliberate30% of the potential lost revenue
Deliberate but not concealed70% of the potential lost revenue
Deliberate and concealed100% of the potential lost revenue

Penalties for Innacurate Corporation Tax Returns

As above, filing a return with inaccurate corporation tax figures will result in penalties of increasing severity depending on whether HMRC believe they are careless, deliberate or concealed.

The penalty structure is as follows:

Type of errorPenalty range for unprompted disclosurePenalty range for prompted disclosure
Non-deliberate0% to 30%15% to 30%
Deliberate but not concealed20% to 70%35% to 70%
Deliberate and concealed30% to 100%50% to 100%
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