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What Happens If I Pay Corporation Tax Late – Are there Penalties?

15th March, 2023
Keith Steven

Written ByKeith Steven

Managing Director


07879 555349

Keith is the author of the content on this comprehensive rescue, turnaround and insolvency website. He has expert knowledge on the company voluntary arrangement (CVA) mechanism

Keith Steven
  • What is Corporation Tax?
  • What about if I pay late? What happens?
  • Can I go to court?

What is Corporation Tax?

Corporation Tax is the tax companies are required to pay on their profits. The amount of tax to be paid, depends on the amount of profit made, therefore it is the directors’ responsibility to ensure all financial documents and accounts are accurate, so the appropriate amount of tax is charged.

Within 9 months of the financial year end, a CT600 file needs to be sent to companies’ house. Failure to do this, can have consequences. For any help with sorting out accounts, or if you are aware you cannot pay your tax bill call us today for expert advice on 07833 240 747 or 0800 9700539.

What about if I pay late? What happens?

Paying corporation tax late does not have penalties. What does have penalties, is filing your accounts late. Even if you cannot afford to pay the tax, accounts must be filed on time. If you cannot pay the complete amount in the time, then you can contact HMRC and arrangements can be made. For example, funding can be analysed or HMRC may agree to a Time to Pay deal.

If you do not file your accounts by the required date, which is 9 months after the accounting period ends, the following penalties occur :

Period you are late byThe penalty at the basic rateThe penalty if you have already failed the deadline, 3 consecutive periods
Missing the filing deadline£100£500
3 months£100£500
6 months10% of the total unpaid tax amount10% of the total unpaid tax amount
12 months10% of the total unpaid tax amount10% of the total unpaid tax amount

For late payments, you will only be charged interest at the rate of 3%, on the outstanding amounts due. However, if you are a company who pays your tax in monthly instalments rather than the bulk at once, and you deliberately pay the incorrect amount of your instalment, or pay it late, you may have penalties. See the website below to find out your penalties if this applies to you.

https://www.gov.uk/guidance/corporation-tax-paying-in-instalments/penalties-on-instalment-payments

It should be known that If you fail to keep an adequate record in relation to the accounting periods, you risk being liable for a £3000 penalty fee.

Can I go to court?

No. You cannot go to court for late payments or late filing. All that HMRC want, is the tax to be paid. You will be issued letters demanding the payment. Your credit rating will not be affected. In the worst case scenario, HMRC have the authority to wind up your company, or seize your assets. It is very rare that the directors themselves will be personally liable.

Contact us today for any further enquires. We are experienced in dealing with HMRC so can help you.

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