This is a freeview 'At a glance' guide to Corporation Tax penalties.

Subscribers see Adviser's Tax Penalty Planner

What penalties apply for Corporation Tax?

Corporation Tax penalties are in general set out in the combined penalty regime which applies across all the direct taxes with some exceptions as set out below.

Late filing penalties

  • Late filing penalties are covered by the rules in Schedule 18 of Finance Act 1998.
  • The commencement date for the combined Late filing penalty regime under Schedule 55 Finance Act 2009 has not been announced for Corporation Tax to date.
  • The current rules are:
Lateness Penalty Reference
Miss filing deadline £100 Para 17 Sch 18 FA 98
3 months late £100 Para 17 Sch 18 FA 98
6 months late 10% of unpaid tax Para 18 Sch 18 FA 98
12 months late 10% of unpaid tax Para 18 Sch 18 FA 98

 

The flat rate penalties are increased if the failure to meet the filing deadline is the third consecutive failure:

Lateness Penalty Reference
Miss filing deadline £500 Para 17 Sch 18 FA 98
3 months late £500 Para 17 Sch 18 FA 98
6 months late 10% of unpaid tax Para 18 Sch 18 FA 98
12 months late 10% of unpaid tax Para 18 Sch 18 FA 98

 
The normal filing deadline date is 12 months after the accounting period end: This is extended to the deadline for submitting the relevant accounts to Companies House if later. Ordinarily, the due date for accounts is 9 months after the accounting period end.

Late payment

There are no late payment penalties for corporation tax. Interest is charged on outstanding tax due. There are penalties where companies who are under the quarterly payment regime deliberately fail to pay or deliberately make a payment that is too small. See Corporation tax instalment payments

Security against non-payment

From 6 April 2019 HMRC has the power to require securities in relation to:

  • Corporation Tax and
  • CIS deductions
    • Where an HMRC officer considers that it is necessary for the protection of the revenue.
  • There will be a right to review by HMRC and a right to appeal to the tribunal against a decision to request security or as to the amount, terms or duration of the security.
  • Failures to comply with a request for security will be a criminal offence and subject to fines.

Record keeping

A company which fails to keep adequate records in relation to an accounting period is liable to a penalty of up to £3,000.

Incorrect returns

Errors in returns are covered by Schedule 24 Finance Act 2004. See Penalties: Errors in Returns and Documents (subscriber version).

Failure to produce documents

HMRC has powers to inspect company documents and records, these may extend to the company owners, contained in Schedule 36 Finance Act 2008. See Penalties: Schedule 36 information notices.

Useful guides on this topic

Adviser’s Tax Penalty Planner
A guide to the key direct and indirect tax penalty regimes for returns and payments, excluding VAT.

How to appeal a tax penalty
What are the steps in making an appeal? What should your appeal cover? What does recent case law say on this topic?

Penalties: Failure to Notify
What tax penalties apply if you fail to notify HMRC that you are chargeable to tax? Can they be appealed or reduced?

Penalties: Late filing
Late returns can be subject to a mix of fixed and tax geared penalties. What penalties apply for late filing? Which penalty will apply and when? 

Penalties: SA late filing, payment, notification & error
Self Assessment (SA) tax penalties: what penalties are due for outstanding tax returns? What penalties are due for late payment? Special rules for Covid-19 delays.

Penalties: Schedule 36 information notices
What penalties apply if you fail to comply with an Information Notice request by HMRC? What are your rights of appeal?

 


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