Companies House and HM Revenue and Customs filing and payment penalties
31st July saw the following deadlines for individuals and limited companies:
If deadlines set by Companies House or HM Revenue and Customs are missed, companies and individuals face immediate fines or penalties which can escalate over time. In this weeks blog, we look at these fines and penalties
Companies House – private limited company
Private limited company accounts need to be submitted to Companies House within 9 months of the company’s year-end. If the company does not file accounts by the deadline, it will be subject to the following penalties:
Time after your deadline |
Penalty |
1 day |
£150 |
3 months |
£375 |
3 to 6 months |
£750 |
More than 6 months |
£1,500 |
If your accounts were late the previous year then these fines will automatically be doubled so it’s important you file your accounts by the due date.
Different penalties apply to public limited companies.
HM Revenue and Customs
Corporation Tax Return (form CT600)
A company needs to submit a corporation tax return (form CT600) together with supporting accounts and tax computations within 12 months of the company’s year-end. The accounts need to be in a specific format to be accepted by HMRC software. If the company does not file the corporation tax return by the deadline, it will be subject to the following penalties:
Time after your deadline |
Penalty |
1 day |
£100 |
3 Months |
Another £100 |
6 Months |
HMRC will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax |
12 months |
Another 10% of any unpaid tax |
If your tax return is late 3 times in a row, the £100 penalties are increased to £500 each.
HM Revenue and Customs will write to a company if a tax return form is 6 months late. This is called a ‘tax determination’ and cannot be appealed against. A company must pay the corporation tax due and file the tax return. HM Revenue and Customs will then recalculate the interest and penalties due.
VAT
For any VAT registered business, HM Revenue and Customs may issue surcharges and penalties. These surcharges and penalties work on a default basis. HM Revenue and Customs will record a default if:
A VAT return is due one month and 7 days after the end of the VAT period, so for a quarter-end of 31 July, the VAT return will be due on 7 September.
Payment is typically due at the same time as the VAT return is due, however, VAT registered businesses who opt to pay their VAT by direct debit have a further 3 days, so for a quarter-end of 31 July, the VAT would be collected by direct debit on 10 September.
Surcharges
If a VAT registered business defaults, they would enter a 12 month surcharge period. During this time, if the business defaults again, the following would happen:
If a VAT registered business submits a late VAT return, they would not have to pay a surcharge if:
If the business does default, HM Revenue and Customs will write to the business explaining any surcharges owed and what would happen should the business default again.
The surcharge is a percentage of the VAT outstanding on the due date for the accounting period that is in default. The surcharge rate increases every time the business defaults again in a surcharge period.
This table details how much the surcharge will be should a business default within the surcharge period.
Defaults within 12 months |
Surcharge if annual turnover is less than £150,000 |
Surcharge if annual turnover is £150,000 or more |
1st |
None |
None |
2nd |
None |
2% (None if less than £400) |
3rd |
2% (None if less than £400) |
5% (None if less than £400) |
4th |
5% (None if less than £400) |
10% or £30 (whichever is greater) |
5th |
10% or £30 (whichever is greater) |
15% or £30 (whichever is greater) |
6th or more |
15% or £30 (whichever is greater) |
15% or £30 (whichever is greater) |
It is important to note that no surcharge is payable on the first default.
Penalties
HM Revenue and Customs can charge the following penalties:
Construction Industry Scheme (CIS)
If a contactor working under the CIS scheme misses the deadline for submitting a CIS return, they will face the following penalties:
Time after your deadline |
Penalty |
1 day |
£100 penalty |
2 months |
£200 penalty |
6 months late |
£300 penalty or 5% of CIS deductions (whichever is greater) |
12 months late |
£300 penalty or 5% of CIS deductions (whichever is greater) |
A CIS return must be submitted within 2 weeks of the month-end. So for a month end of 5 July, the CIS return must be submitted by 19 July.
Self-Assessment
For individuals, there are two types of penalties, those for late filing and those for the late payment of owed tax. Both of these penalties increase over time.
As most individuals are aware, a Self-Assessment tax return must be submitted to HM Revenue and Customs by 31 January each year. If this deadline is not met, the following penalties will apply:
Time after 31 January deadline |
Penalty |
1 day |
£100 penalty |
3 months |
£10 daily penalty for up to 90 days (maximum £900) |
6 months |
5% of tax due or £300 (whichever is greater) |
12 months and later |
5% of tax due or £300 (whichever is greater) |
HM Revenue and Customs by apply additional penalties if they believe that the tax payer is intentionally withholding information or trying to evade tax. It is therefore imperative to provide HM Revenue and Customs all information they require when they undertake any checks.
Payment of tax is due on 31 January and 31 July each year. A payment is only due on 31 July if an individual is obliged to make payments under payments on account. If the deadline for payment is not met, the following penalties will apply:
Lateness |
Penalty |
30 days |
5% of tax due |
6 months |
5% of tax due at that date |
12 months and later |
5% of tax due at that date |
Clearly, it is imperative that filing deadlines are met and tax payments are paid at the appropriate times to ensure that penalties are not incurred.
If you have any queries or require any advice, please contact us on 0161 952 4244.