Penalties for Late Filing
Company Tax Return, like other taxes also has its deadline for filing. Meaning, if you fail to pay your tax return within the prescribed period, corresponding penalties shall apply, and as time passes by after the deadline, the fine gets higher and higher. That is the reason why it is important for you to be mindful/always keep reminded on these crucial dates to pay or file such taxes.
The HM Revenue and Customs (HMRC) will estimate your Corporation Tax Bill and will be responsible in adding penalty for unpaid taxes as much as £100 up to 10% of the unpaid tax for 12 months. To fully understand, hereunder is the breakdown of the penalties you will pay if you fail to meet the deadline:
- 1 day after the deadline- £100
- 3 months after the deadline- another £100
- 6 months after the deadline- HMRC will add penalty of 10% from the unpaid Corporation Tax Bill. The HMRC will send you a letter requiring you to pay the unpaid tax. It is called by the term “tax determination. If your company already received this notice/letter, you cannot appeal against it unless otherwise, there is a reasonable justification for the late filing.
- 12 months after the deadline- another 10% of any unpaid tax
Remember: The later you file after the deadline, the bigger penalties are charged. If you don’t pay your tax return on time three times in a row, penalties will increase up to £500 each. It is therefore important to pay your Corporation Tax due and file your tax return because the later the payment, the higher the penalties will be charged against you.
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As mentioned above, a company can still file its appeal against the penalty for late filing unless otherwise a justifiable reason is presented. All you need to do is to call the Corporation Tax helpline, or better yet, write to your company’s Corporation Tax Office.
However, the HMRC does not accept all types of justifications as there are only certain excuses that their office considers why you were not able to pay your obligation. Some justifiable reasons that the HMRC will accept are those life-threatening illnesses or situations (disasters, fire, etc.), death of a close family member before the deadline, postal delays, system/software failure of HMRC and others. Since the whole world is affected with the COVID-19, HRMC also considers this reason as long as you can explain clearly how this pandemic affected the filing.
For more inquiries, the HMRC helpline is open from 8 AM to 6 PM from Mondays to Friday and their customer care personnel are more than willing to provide assistance.
How do I get out of HMRC fines?
Filing your appeal to HMRC is the only way to save yourself from paying penalties due to late filing of taxes, however, this is not always 100% guaranteed since the HMRC has their own standards and requirements in order for them to grant the appeal of a certain company. In filing your appeal, you have to make sure that you provide the necessary information, such as the date the penalty is issued, the date you filed your Self-Assessment Tax Return and the exact details of your reasons for late filing.
Are HMRC penalties criminal?
Tax evasion can be penalized as financial, criminal or both depending on the severity of the and based on the civil procedures of the HMRC. Prior to the issuance of penalties, the HMRC will conduct thorough investigation in order to determine whether there is an absolute ground to order penalties for unpaid taxes. But as long as the underpaid tax is settled, there is unlikely to be a penalty for tax evasion.
How long do I have to pay HMRC penalty?
You will be given 30 days to pay the HMRC penalty from the date of the PAYE late penalty notice to pay. You can pay the penalties in different paying channels, except at the Post Office. If the deadline falls on Holidays and Weekends, make sure to pay the penalty on the last working days before these dates.
What happens if you ignore HMRC?
HMRC is considerate as long as you provide justifiable reasons for filing your tax return late, however, if you ignore their notices and won’t respond, you will face a penalty and worse, it could lead to the forced closure of your company. That is why it is very important to settle unpaid taxes and be mindful in the deadline of filing.
Can HMRC look at my bank account?
Yes. HMRC is authorized to issue a “third party notice” during an investigation for tax evasion. Said notice will be sent to banks, financial institutions and even to the taxpayer’s lawyers and accountant in order to request information about the financial status of a company.
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