There are strict deadlines, whether you are filing your company accounts, corporation, or personal tax return. While there are situations where you can apply for an extension, it is important to be aware of the deadlines and the potential penalties. Repeat offenders may see their options reduced in the future and increased penalty charges.
Meeting your deadline dates
When filing company accounts or tax returns, where possible, you should look to meet the relevant deadlines. This ensures that you avoid penalties and allows you more time to focus on your business and income streams. We will now take a look at company filing deadlines and potential penalties.
Filing your company accounts
When filing your company accounts, they will only be deemed “delivered” by Companies House once they comply with requirements detailed in the Companies Act. If your accounts were rejected, they would be treated as not delivered. Consequently, you would be liable to late filing penalties. It is also important to note that the delivery date is when the accounts are received by Companies House, not the date you physically dispatched them.
There are two important deadlines when it comes to filing company accounts, which are:-
- First accounts within 21 months of the incorporation date
- After that, they must be delivered within nine months of the company’s financial year-end
In light of Covid, you may be able to apply for a three-month extension if the pandemic has impacted you. However, any application to extend the deadline must be made before the standard filing date. Any additional extension beyond three months is unlikely. Under the law, company accounts must be filed within 12 months of the year-end date.
Penalties for late filing of company accounts
If your accounts are filed after the standard or extended deadline, you will receive a penalty notice. This will include details of the:-
- Penalty
- Last date for filing
- Date the accounts were filed
- Level of penalty imposed
The penalties applied for late filing are as follows:-
- £150 if not more than one month late
- £375 if more than one month but no more than three months late
- £750 if more than three months but no more than six months late
- £1500 if more than six months late
If you don’t deliver your accounts within the filing period for two consecutive financial years, each of these charges will double.
Filing your company tax return (CT600)
There is a common misconception regarding company tax calculations and company profit and loss, as shown in the annual accounts. To calculate your corporation tax, the company profit and loss figure will be adjusted for issues such as:-
- Depreciation
- Capital allowances
It is essential to recognise the very different roles of Companies House and HMRC when it comes to report and accounts, and corporation tax. Companies House has no role to play regarding the filing or collection of company tax. Your company tax return must be submitted to HMRC within 12 months of the end of the accounting period in question. However, any corporation tax due must be paid electronically within nine months and one day after the accounting period.
Payment of corporation tax
So, we have a situation where you have a 12-month deadline to file your company tax return, but any corporation tax due must be paid within nine months and one day of the accounting period end. The rules are different for companies with taxable profits above £1.5 million, with corporation tax paid in instalments.
While there are no formal penalties for late payment of corporation tax, you would be charged daily interest. HMRC will begin charging interest from the day after your payment deadline until your corporation tax liability is paid in full. If you are having difficulties paying your corporation tax, it is advisable to arrange a repayment plan with HMRC. The company will still be charged interest, but it is a more formal arrangement.
Penalties for late filing of company tax return
If you are late in filing your company tax return, there is a formal penalty fee structure, as follows:-
- £100 if one day late
- An additional £100 if three months late
- After six months, HMRC will estimate your corporation tax bill and add a penalty of 10%
- After 12 months, a further penalty of 10% will be added
As you can see, if you are late filing your company tax return and cannot pay your corporation tax on time, the penalties and interest can soon add up.
Self-assessment tax returns
Self-assessment tax returns are traditionally the domain of the self-employed. However, those with income/gains arising outside the UK may also need to submit a self-assessment tax return.
The deadline dates for self-employed self-assessment tax returns are as follows:-
Example: Tax year 6 April 2020 to 5 April 2021
- One-time registration for self-assessment, 5 October 2021
- Paper tax returns, midnight 31 October 2021
- Online tax returns, midnight 31 January 2022
- Payment of tax due, midnight 31 January 2022
HMRC will allow online tax return submissions until 28 February without incurring a late filing penalty. Those who “pay on account” will pay two tax instalments a year with a second deadline of 31 July.
Penalties for late filing of self-assessment returns
The standard late filing penalty is £100 if your tax return is up to 3 months late. If you fail to file your return within three months, additional charges will be added to your account. Interest will be also charged on outstanding tax at the prevailing rate.
Summary
The filing deadlines and penalty structures for company, corporation and self-assessment returns are relatively straightforward. In extenuating circumstances, you may be able to apply for an extension, but these scenarios are few and far between. If you receive a penalty that you believe is unfair, you will have the right to appeal.
While penalising those struggling with filing deadlines and payment of tax may seem a little unfair, this encourages forward-thinking and preparation. It is essential that, where possible, your filings and payments are made within the deadlines. Those who repeatedly miss deadlines will face increased charges.
Sources:-
https://companieshouse.blog.gov.uk/2021/09/14/how-to-avoid-a-late-filing-penalty-2/
https://www.crunch.co.uk/knowledge-tax/hmrc-companies-house-late-filing-payment-penalties
https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts
https://find-and-update.company-information.service.gov.uk/extensions
https://www.gov.uk/company-tax-returns/penalties-for-late-filing
https://www.gov.uk/pay-corporation-tax
https://www.thefriendlyaccountants.co.uk/corporation-tax-bill-calculated/
https://www.simplybusiness.co.uk/knowledge/articles/2021/11/how-to-file-a-company-tax-return/
https://www.which.co.uk/money/tax/small-business-tax/how-to-file-a-company-tax-return-amq1r7k0p810
https://informi.co.uk/finance/how-do-i-complete-company-tax-return
https://www.gov.uk/self-assessment-tax-returns/deadlines
https://www.gov.uk/self-assessment-tax-returns/penalties
https://www.gov.uk/understand-self-assessment-bill/payments-on-account
https://www.litrg.org.uk/tax-guides/migrants/who-has-complete-self-assessment-tax-return
https://www.litrg.org.uk/tax-guides/self-employment/when-do-i-make-self-assessment-payments-and-file-my-tax-return