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HMRC Corporation Tax Late Filing Penalties

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HMRC Corporation Tax Late Filing Penalties

All limited companies are obliged to pay Corporation Tax on profits generated annually – and the bill should be paid to HMRC on time.

If a business fails to pay on time or does not file its tax return by the required date, it will face Corporation Tax Late Filing Penalties. In addition, HMRC has the right to impose penalties upon businesses that do not meet the deadlines.

Corporation Tax Late Payment Penalties

Failing to pay your Corporation Tax bill on time can lead to penalties and interest charges, which will be applied to the balance of your account with HMRC.

Starting your preparation too late can have serious consequences for your business. To avoid these issues, you should take the time to start preparing as soon as you reach the end of your accounting period.

This will allow you enough time and flexibility to pay your corporation tax bill on time without worrying about additional penalties and interest charges being applied.

The Corporation Tax under £1.5 million must be paid within nine months and one day of the end of each accounting period.

You can pay in installments if your taxable profits are greater than £1.5 million. When a limited company fails to pay its Corporation Tax by the due date, it will receive a penalty in the form of an additional interest charge.

There are several scenarios in which Corporation Tax late payment interest could be charged, including when you:

  • Pay your Corporation Tax late.
  • Pay the wrong amount of Corporation Tax.
  • Don’t pay any Corporation Tax at all.

The penalties for these transgressions can be quite severe. Interest will be charged the day after the amount should have been paid. The rate is usually 2-3% and continues until payment is made in full.

How Does HMRC Deal with Late Filing and Payment?

If you don’t file your Corporation Tax return and pay what you owe on time, HMRC will send you a ‘tax determination.’

This is a letter telling you how much they think you must pay. The letter tells you how much tax they think you owe and how much interest and penalties they’ll add to it. You cannot appeal against the tax determination.

If you are a limited company owner, you must file your tax return yearly. Every year, there is a deadline for filing these returns, and the tax authorities will charge you penalties if you do not meet this deadline. The main types of penalties are shown below:

  • One day late: £100 penalty
  • Three months late: Another £100 penalty
  • Six months late: HM Revenue & Customs will estimate your Corporation Tax bill and charge a penalty of 10% of the unpaid tax.
  • 12 months: A further 10% of any unpaid tax

A penalty of £100 is imposed on late income tax returns; however, the penalty increases to £500 if the taxpayer is late in filing three consecutive tax returns.

Corporation Tax Late Payment

If you are a small or medium-sized business owner, you may be unable to pay your Corporation Tax bill. Corporation Tax is a legal requirement for all limited companies and should be paid in full and on time. If you are struggling with this obligation, you need to contact HMRC as soon as possible as they can take legal action against you.

It may seem like there is no way that your company will be able to pay its debt in the near future, but HMRC can help you develop a strategy to clear these arrears.

When you contact them, they will ask you about your company’s financial situation. For example, they want to know whether your assets and liabilities are overstated or understated, what income and expenditure levels your company has had in previous years, and how much money you have available to pay off any outstanding bills.

If it is unlikely that you will be able to make a full payment, HMRC may offer a Time to Pay arrangement so that they can work out an appropriate amount for you to pay them each month.

Time to Pay Arrangements (TTPs)

In the UK, Time to Pay Arrangements are a formal agreement that allows both parties – the taxpayer and HMRC – to agree on how long it will take for tax arrears to be paid off. The duration of the arrangement can vary widely depending on each company’s circumstances.

Some arrangements last only a few months, while others can extend for longer periods. It depends upon how much tax is outstanding and how much can be paid off each month.

Any agreement on a repayment schedule must be honoured. Otherwise, HMRC will be justified in taking more serious action. If you cannot keep up with the payments on your agreement with HMRC, the tax office may decide that you have reneged on the deal and demand immediate full payment (as well as legal costs and interest).

Can You be Taken to Court for Late Payment Of Corporation Tax

If you’re worried about potential court hearings for late payments or late filing, you can breathe a sigh of relief—you’re not likely to go to court over either of these issues.

However, if your company is in debt, you must deal with the issue promptly. HMRC has powers to collect debts from companies, and if you fail to act on a tax debt, they can apply to the court for a winding-up order. The company will then be placed in administration, and the administrators will fully control the company’s bank accounts.

There are always ways to avoid a winding-up order being made against your company, but you must act before it’s too late. Whether starting a payment plan, negotiating with HMRC, or making an offer of completion, options are available to prevent your business from being closed down.

Does Paying Corporation Tax Affect Your Credit Rating?

No, it won’t. Credit rating agencies do not take into account anything to do with any tax. So the only thing that affects your credit rating is whether you pay your bills on time and pay back debts (if you have any).


If you’re struggling to pay your bills on time or want to be better prepared the next time tax payments are due, it’s important to remember that these deadlines are absolute and should be treated as such.

If you miss the filing deadline, it can negatively impact your company’s financial health, so be sure to get in touch with HMRC as quickly as possible.

With Future Strategy on your side, you can rest assured that you have access to expert knowledge to guide you through this challenging situation. That means peace of mind and a step forward for your business.

For more information about these and other services, call our Future Strategy experts today on 0333 772 1808.

We can talk you through all of your options and find you the right solution

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