HMRC & Companies House late filing & payment penalties for 2019/20

If you miss a filing or payment deadline set by Her Majesty’s Revenue & Customs (HMRC) or Companies House, you’ll face immediate penalties and fines which escalate over time.

Self-Assessment

You must submit your annual Self-Assessment tax return and pay any tax you owe for the previous tax year by 31 January each year.

HMRC issue two types of Self-Assessment penalties – those for late filing, and for late payment of owed tax. Both increase over time.

Late filing penalties

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)

Additional penalties may be applied if HMRC believes the taxpayer is intentionally withholding information or trying to evade tax.

Late payment penalties

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

 

VAT

For VAT registered businesses, HMRC may issue surcharges and penalties. HMRC record a ‘default’ if:

  • they do not receive your VAT return by the deadline
  • full payment for the VAT due on your return has not reached their account by the deadline

Surcharges

You may enter a 12-month ‘surcharge period’ if you default. If you default again during this time:

  • the surcharge period is extended for a further 12 months
  • you may have to pay an extra amount (a ‘surcharge’) on top of the VAT you owe.

If you submit a late return, you will not have to pay a surcharge if you:

  • pay your VAT in full by the deadline
  • have no tax to pay
  • are due a VAT repayment.

HMRC will write to you explaining any surcharges you owe and what happens if you default again.

Your 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 you default again in a surcharge period.

This table shows how much you’ll be charged if you default within a surcharge period. You do not pay a surcharge for your first default.

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 15% or £30 (whichever is greater) 15% or £30 (whichever is greater)

Penalties

HMRC can charge you a penalty of up to:

  • 100% of any tax under-stated or over-claimed if you send a return that contains a careless or deliberate inaccuracy
  • 30% of an assessment if HMRC sends you one that’s too low and you do not tell them it’s wrong within 30 days
  • £400 if you submit a paper VAT Return, unless HMRC has told you you’re exempt from submitting your return online.

Corporation Tax Return (form CT600)

You’ll have to pay penalties if you don’t file your Company Tax Return (form CT600) by the deadline.

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 three times in a row, the £100 penalties are increased to £500 each.

If your tax return is six months late, HMRC will write telling you how much Corporation Tax they think you must pay. This is called a ‘tax determination’. You can’t appeal against it. You must pay the Corporation Tax due and file your tax return. HMRC will recalculate the interest and penalties you need to pay.

Construction Industry Scheme (CIS)

If you are a contractor working under the CIS, you will face penalties if you miss the date for your CIS return.

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 additional £300 penalty or 5% of CIS deductions (whichever is greater)

Companies House – Private Limited Company

You’ll have to pay penalties if you don’t file your annual accounts online at Companies House by the deadline.

Time after your deadline Penalty
Up to 1 month £150
1 to 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.

Penalties for incorrect tax returns and documents

If you take reasonable care to get your tax right, HMRC will not penalise you, even if you make a mistake.  Most people take care to complete their tax returns correctly.  HMRC want to encourage that and help them get it right. HMRC use penalties to stop people, who don’t take care, from gaining an unfair advantage.

What taxes to they apply to?

 Initially, the new penalties will apply to Income Tax, Corporation Tax. VAT, Capital Gains, PAYE and National Insurance contributions.  The new penalties apply from 1 April 2009, but will cover errors in returns periods that start on or after 1 April 2008. This means you need to make sure now that your business records are full and correct, so that your returns will be correct.

How do I take reasonable care?

Here are some of the ways you can show that you’ve taken reasonable care:

Keep accurate records to make sure your tax returns are correct.

Check with HMRC or a tax professional what the correct position is when you do not understand something

Tell us at once about any error you discover in any return or document that you have already sent to us.

How can I reduce a penalty?

HMRC can substantially reduce any penalty, in some cases to zero, if you:

  • Tell us about any errors
  • Help us work out if any extra tax is due
  • Allow us to check figures

The penalty is a percentage of any extra is due. You will also have to pay the extra tax and any interest due on that tax, as well as the penalty.

What are the penalty rates?

The penalty rate depends on why you made the error, the less serious the reason the smaller the penalty.

  • If you  have taken reasonable care – no penalty

Penalties due if there was a

  • Careless mistake – Penalty up to 30% of the extra tax due
  • Deliberate mistake – Penalty up to 70% of the extra tax due
  • Deliberate and concealed error – Penalty up to 100% of the extra tax due.

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