A tax return must be filed if you are a corporation and owe taxes. Penalties may apply if your tax return is filed after the deadline.
The Internal Revenue Service (IRS) charges a penalty equal to 5% of the unpaid tax for every month or portion of a late tax return. The fine cannot be more than 25% of the underpaid tax.
A minimum penalty of $135 or 100% of the unpaid tax, whichever is smaller, may be assessed if your tax return is filed more than 60 days after the deadline.
Businesses that fail to submit their Company Tax returns by the set date impose late filing penalties for corporation tax. HMRC will impose a £100 charge on you even if the deadline is only missed by one day.
Penalties then rise over time, harming your business’s standing with HMRC. If the problem is poorly handled, it may potentially lead to the failure of your company.
Each corporation must file its tax return 12 months after the end of its accounting period; there is no specific date by which this must be done.
Either you or your accountant can complete the file. However, as the company’s director, it is ultimately your job to guarantee that this is completed on time and that the information provided is true.
Despite having no company tax due or having a loss for the year, you must still file a tax return.
What are the penalties for late filing, and what can you do to get things back under control if they have already gotten out of hand?
Learn more about corporation tax and how accountant services in Warrington help you handle late filing penalties.
Penalties For Corporation Tax Late Filing
As we previously stated, if the tax return is even one day late, there is an initial penalty. From that point forward, the following sanctions are applicable:
- 1 day late: £100 fine
- 3 months late: an additional £100 penalty (as estimated by HMRC)
- 6 months late: 10% of the outstanding amount
- 12 months late: An additional 10% of any outstanding taxes
The financial penalties for filing your tax return one day late and three months late, as well as the 10% penalty for any unpaid tax after six and twelve months, climb to £500 apiece if you miss the deadline three times in a row.
HMRC will estimate the amount of corporation tax they believe your firm owes if your tax return is over six months overdue. No appeals process is in place for this procedure, known as a “tax determination.”
Instead, you must pay the requested amount; the requested amount may be “displaced” if you complete your tax return and pay the real amount of corporation tax owing, in addition to any fines and interest that may be owed.
The Management of Late Filing and Payment by HMRC
If the payment deadline has passed, you must contact HMRC immediately. Otherwise, they might file a lawsuit against your business.
Your company’s amount of assets, obligations, income and expenses will be questioned to determine whether
You might be able to negotiate a Time to Pay arrangement if they believe that while your firm can’t pay the arrears immediately, you can fulfil your corporation tax obligation with a little more time.
Time to Pay (TTP) Arrangement: What Is It?
This payment schedule typically lasts six months, though it may be shorter or longer depending on the needs of each organisation. Make sure you can afford the instalments for the entire time when discussing the conditions of a Time Pay agreement.
If you cancel this kind of agreement, HMRC will probably demand payment in full and may file a lawsuit if you don’t get the money right away.
Offering HMRC enough monthly payments to convince them to extend the deadline for payment while also making sure that your finances are not put too far out of balance and that you can make the agreed-upon repayments can be a difficult balance to strike.
If HMRC doubts your capacity to adhere to the suggested payment plan, they will reject your application; no extension will be allowed. You will also need to produce documentation evidence to substantiate the repayment amounts you have offered.
Conclusion
If you file your corporation tax return late, you may be subject to some penalties. These can include a late filing penalty, a late payment penalty, and interest on unpaid tax. In addition, you may also be required to pay any back taxes that are owed. If you cannot pay your corporation tax bill, you may be subject to collection action by the IRS, so it’s best to hire accountants in Warrington.
Accountancy247 provides cost-effective, high-value solutions to meet every client’s needs regardless of their business size. Get a quote on accountant services in Warrington today!
